Open Source: The Model Is Broken

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Collaboration begets lean development, lower costs, platform independence, and sustainability.

like sharing a pizza

While the open-source business model may be broken, the concepts behind open source will continue to bring new value to customers and strong returns to software company stakeholders.

But the value is in the collaboration, not in open source itself.

Think about it like going in with others on a pizza. Too often, businesses need to develop software with the same "ingredients" as everyone else, and this offers no competitive advantage. If everyone wants the same pizza, why not share the cost? And by the way, let's not just share the cost; let's make it together so we get it just right and know what we're getting.

Win-Win Works

This is where collaboration works best. Companies today are coming together to form "communities" of subject matter professionals—executives, business managers, doctors, or researchers—to define software that can be produced at much lower cost. The cliché that everyone wins may be corny, but it's true here. And hey, it's the way the best open-source projects always started.

But today, open source is the means. These "communities" of subject matter experts are using it to build their applications because it's open and low-cost, but in the end, it doesn't really matter if the final product is available via subscription, delivered as a service over the Web, or licensed under the General Public License that governs free software.

Unless open-source providers find new ways to add value for their customers, especially in this economic environment, the growth of their companies is at serious risk.

Acquisitions may still happen, but they will lack the multiples we saw with Sun and MySQL. The days of uttering the word "open source" to inflate valuations are over. But fortunately for the market, customers and vendors are together taking the best of it and building new kinds of software companies that are focused on collaboration.

Cohen is CEO of Collaborative Software Initiative, where he works with IT business and technology leaders to apply open-source methodologies to software development and business communities. He was formerly CEO at Open Source Development Labs.

Business Exchange related topics:
Open Source Software
Mergers and Acquisitions
Business Analysis

Stuart Cohen is the CEO of Collaborative Software Initiative, where he works with IT business and technology leaders to apply open source methodologies to software development and business communities. He was formerly CEO at Open Source Development Labs.