Open Source Profits During A Recession

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Open Source Profits During A Recession


Matt Hartley

11/30/2007

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One possible result? Companies adopt the software, which is using a localized application to now interface with web based functionality hosted by XYZ Inc. Anyone could take this code and duplicate it, however this has not happened, as it is simply not strategically valuable to do so.

The company, who used to make one-time sales with a localized-only application is now giving away the localized application which with the new release, is working in conjunction that is largely controlled by the same company -- on a subscription basis. That low cost subscription provides access to the web services and for a little more, a help desk.

So why would this work, while simply giving away something like an RSS reader never make a dime? Simple, it's about providing value. Take that same generic RSS reader -- provide hosted RSS feeds that are combed through daily for quality and if possible, targeted to each subscriber's needs. Toss in some extra server side features, open source the whole thing, and you have a freely available RSS reader, that will work as a stand alone application, making your software company money. It's simply a matter of restructuring where the profit center is and tying it into a valuable resource not seen elsewhere.

Open source, tough times, and the end user

Thus far, we have talked about what is in it for the companies: those looking to sell software, those looking to profit in other ways, and even those simply needing to cut existing software costs. But what about the average home user? College students, single moms, the recently laid-off -- what is in it for them?

Simple -- freedom to choose if and how much they are going to spend in order to use the software they need. Many applications, such as Open Office, Scribus, Mozilla software (Firefox/Thunderbird) are used on multiple platforms. But at the end of the day, each is 100 percent freely available, which means that users are not barred from using these applications due to economic uncertainties.

So it is fair to say that during any uncertain economic speed bump, access to open source software means freedom to provide the following benefits for anyone who wishes to implement them:

  • Take existing open source software, package it, provide something you created of value to bundle with it (tutorials, whatever) and make some extra cash.

  • Save your company unnecessary upgrade expenses with software that puts you in the driver's seat. Spend only what is needed for the level of functionality you need.

  • Free yourself from locked down file formats. Should a project stop being developed, your company is free to hire a freelancer to add anything needed to it rather than remaining stuck with something now totally outdated.

  • Reinvent your own software company should those high-end sales fall flat for some reason. Find a way to tie in some web-based functionality to the now freely available localized app. It will not make as much out the door, but it is residual versus a one-time lump sum.
  • I will not argue that historically, open source companies have not fared as well on the stock market as some closed source companies. Then came companies like Google, which uses open source software everyday.

    So let Google be a lesson to us all, especially if anyone out there is in the "software business." Because even if we fall into a recession, there remains plenty of potential for consumer savings, business growth, and even new markets in otherwise tough times.

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