The Continuing Evolution of Open Source Business Models

First published on the Actuate blog on July 25, 2014. Reproduced here in full. 

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Quentin Hardy, the deputy technology editor at the New York Times, published a blog post last Wednesday concerning a subject that’s important to us at Actuate: Open Source and the Challenge of Making Money. In the post, Hardy writes that it’s a “trend of businesses to start with open source models and then switch to more proprietary offerings,” and that this perceived shift “raises the question of whether it makes sense to build free stuff at all.”

I’m not so sure that free vs. proprietary is an either/or proposition. Yes, it makes sense to build free stuff, if it’s also great stuff. It also makes sense to sell great stuff. Actuate (with BIRT) and other open source-based companies demonstrate that the two are complementary – it’s good karma and good business to create compelling products and services based on open source.

If you’re reading this blog, you may know that it’s been a little over a decade since BIRT launched as an open source project. Actuate, already a 10-year-old company at the time, co-founded the BIRT project in 2004 (through the Eclipse Foundation) and has since provided continuous and substantial support and intellectual property to the project. We’ve also built a solid, profitable business on the open source BIRT foundation. We’re proud to support an open source project that’s widely used and loved – an independent survey shows that 3.5 million developers worldwide use BIRT – and we believe that our revenues enable us to better support that project.

Our profits don’t diminish Actuate’s commitment to the open source community as a whole or the BIRT project in particular.  Indeed, at Actuate it’s a business imperative for open source BIRT to be as solid and reliable as it can be. But we’re also motivated to create commercial products that add so much value to open source BIRT that our customers can’t afford not to use them. Companies that want enterprise-class features (including interactive reports instead of static ones, scalability to millions of users, and page- and user-level security) but can’t invest the time or money to build them from scratch see Actuate’s value.

Our model is precisely what venture capitalist Peter Levine described on TechCrunch earlier this year in a piece about the economics of open source: “Build a big business on top of and around a successful platform by adding something of your own that is both substantial and differentiated.” (Italics his.)

Actuate’s open source roots also motivate us to experiment with novel ways to get BIRT into the hands of users. Our latest venture along these lines is BIRT iHub F-Type, a free server that incorporates all of the functionality of BIRT iHub (Actuate’s commercial deployment platform), limited only by output capacity.

Yes, BIRT iHub F-Type is “free stuff.” But it’s also great stuff. I can personally assure you that people have devoted, and continue to devote, countless hours and considerable brainpower to creating and refining BIRT iHub F-Type. We believe developers will build and deploy many great customer-facing applications using it.

And we believe that some of those developers will build such great applications with BIRT iHub F-Type that their users will demand more capacity (which we make available as an in-app purchase) or those demands will require that they upgrade to the full commercial version of BIRT iHub.

We’ve made this creative move because we believe that there is no single way to make money on open source. This meshes with the thinking of one of Hardy’s interviewees, Drupal creator Dries Buytaert (now CTO of Acquia), who wrote a blog post responding to Hardy’s Bits Blog piece. Buytaert described evolving open source business models and wrote, “Rather than an utopian alternate reality as Quentin outlines, I believe Open Source is both a better way to build software, and a good foundation for an ecosystem of for-profit companies.” Buytaert’s piece is a good counterpoint to Hardy’s, and worthy of careful reading.

Open source and its related business models will continue to evolve – and be debated – and that’s as it should be. We welcome the debate.

Open book image courtesy of Opensource.com. 

Reproduced in full from http://blogs.actuate.com/the-continuing-evolution-of-open-source-based-business-models/#sthash.0J2jMWZi.dpuf

A version of this article also appeared on LinkedIn: https://www.linkedin.com/pulse/open-source-business-models-fred-sandsmark

Cal State East Bay Magazine is now online

I’m pleased to share the news that the Spring 2014 issue of Cal State East Bay magazine is now online. I have two articles in the issue: a profile of father-daughter track stars Marcus and Lauren McGlory, and four vignettes on former student-athletes who credit their success in life on their participation in Pioneer athletics: Lori Stilson-Armstrong, Frank Fudenna, Rich Sherratt, and brothers Don and Mark Sawyer.

Throwback Thursday: Wireless Networks, 8 Years On

“A wireless LAN can enable your employees to do their jobs more quickly and efficiently, allowing them to be more responsive to customers. Convenience is a major business reason for using a wireless network, says Craig J. Mathias, a principal with Farpoint Group, an independent wireless advisory firm. “Getting access to information and acting on it in a timely fashion is one of the last competitive differentiators,” he says.

In 2006 I wrote “Seven Steps to Wireless” for Cisco’s iQ magazine. Hard to believe how much has changed since then; wireless LANs (WLANs), then a relative rarity, are ubiquitous now. Eight years ago, organizations actually needed advice such as “Evaluate network infrastructure. Can your switches and routers handle wireless access point traffic?” and needed to be coached on various flavors of wireless security. (Well, they probably still ought to think harder about security, but rightly or wrongly that onus increasingly falls on users.)

My eight-year-old piece is perhaps timely today given the revelations from the Olympic Winter Games in Sochi that the Russian security apparatus can spy on wireless communications, including WiFi and mobile phone networks. In such a case, the dilemma facing users is daunting but age-old: Armor up, increasing complexity and reducing convenience for the sake of personal privacy? Or suck it up and let them snoop, in exchange for speed. I’m interested to see what visitors to Sochi will choose, and if we’ll even know what they choose.

Throwback: Big Birds Bug ‘Burbs

My article about wild turkeys, which appeared in the short-lived MyHomeMyTown magazine in late 2003, is reproduced here. My friend Bill Crosby, editor of MHMT, let this fabulous headline stand:

Big Birds Bug ‘Burbs

At first glance—maybe out a car window along an East Bay road—they look like rocks or tree stumps. Definitely too big to be birds. A closer look reveals wild turkeys, scratching for a meal.

They’re a thrilling—and increasingly common—sight. The wild turkey population in North America has quadrupled to more than 6 million in the last 30 years, according to the National Wild Turkey Federation. And though turkeys aren’t native to the state, some of that growth has been in California; indeed, turkeys can be found in every California county except San Francisco.

Once the birds are established, their population growth is a matter of biology and arithmetic.

Continue reading Throwback: Big Birds Bug ‘Burbs

Throwback: What the Doctor Ordered

Dr. Chance lifted the cylindrical vessel to the light to take a closer look at the sightless sphere within. The lense obligingly rolled in the watery liquid to meet his gaze. With a slender probe he lifted the orb from the medium, releasing a pungent odor. He had smelled this countless times before; it recalled late nights in med school.

This specimen was intact and undamaged. He studied the graceful contours, and silently praised a higher power for creating an elegant structure for a vital purpose. “This one his perfect,” he said, praising the owner of the dispensary as he returned the globe to the liquid. “I guess that’s why I always come back here.”

Dr. Chance drained the liquid. His throat burned and his eyes watered. “Two olives in the next one,” he said with a wink as he set the glass back on the bar.

My honorable mention–winning entry in the Sierra College Gothic Horror Short Fiction Contest of 1996. Happy Halloween!

Throwback: OneShare.com

I heard on the radio the other day that Disney would no longer issue stock certificates, and I thought of Lance Lee.

I met Lance in the late 1990s at a yoga retreat at White Lotus in Santa Barbara. He told me about his company, OneShare.com, which sells single keepsake stock certificates. Lee had been a conventional stockbroker, but enough clients asked to buy single shares through him that he saw a business opportunity. (He still needed a broker’s license to sell single shares.)

I wrote up OneShare.com for California Computer News in July 2000. Among many fun facts, Lee told me that Disney was the most popular stock he sold. A quick look at the OneShare.com website today shows that ranking hasn’t changed. The stock was — is — a popular gift for kids — in part because the certificate is lovely, depicting Disney characters and a smiling portrait of Walt.

For Lance’s sake, I hope that more companies don’t follow Disney’s lead and stop issuing certificates.

 

 

Hockey Season—Bring On The Sharks! (And Their IT)

In honor of tomorrow’s opening of the NHL season, I’m publishing a Customer Success Snapshot I wrote a few months ago for Symantec about Sharks Sports and Entertainment (SSE), the parent company of the San Jose Sharks hockey team.

The piece is brief, but I tried to toss a little sports jargon in. For example: “Three Symantec solutions get lots of playing time in the SSE data center: Symantec Endpoint Protection, Backup Exec, and Enterprise Vault.”   Uy Ut, SSE’s Director of IT (and a great, quotable interviewee), used the term “skating to the puck” when we talked, but he had already used the same phrase in another tech success story I read. Using it in my piece would land me in the penalty box.

 

Throwback: Not All In The Family

For a few years I had a great gig as a columnist for Cisco’s iQ Magazine, writing about the growth challenges facing small and medium businesses (SMBs) in a column called “Growing Pains.” I got to interview small businesspeople,  consultants who helped them, and academics who studied them, and try to give SMBs practical insight and advice for common challenges.

This piece from 2006, titled “Not All In The Family,” talks about the challenge of bringing  an outsider into a business that had, previously, been run by family members. (The linked file is a three-page PDF; the article is no longer online.) Making this transition for family businesses was, and remains, a common challenge, particularly when family ownership enters the third generation. The column holds up well, I think, and is full of interesting stats. Plus, I had forgotten until I re-read it to post here that I had interviewed Nick Parham for it.

A favorite snippet: “But family businesses are at a crossroads. Many of these companies were originally created after World War II—veterans were as adept at creating businesses as they were at building families.”

If you have worked for or with a family-owned business — or owned one yourself — please share your experience.

What’s the Opposite of Showrooming?

I don’t have much to add to the ongoing debate retailers have about showrooming. In case the use of “showroom” as a verb is unfamiliar to you, it refers to a shopper going to a physical store to look at a product, then shopping for that product online (and, typically, hoping to beat the brick-and-mortar retailer’s price). Is showrooming good or bad for retailers? Even the Harvard Business Review wants to know.  JCPenney just turned off in-store Wi-Fi for customers, probably in part because fast Internet access encouraged showrooming. (Or maybe the Wi-Fi was there so one partner could enjoy YouTube while the other shopped.)

I confess that I showroom occasionally. But I realized last week that, with one specific product, I do the exact opposite of showrooming: I look online to see what I should consume, then proceed to the physical place to partake of the product. I do that with the Sunday New York Times.

Angela and I get the Sunday Times delivered at home because it’s the most economical way to get full access to the online edition. But the physical Sunday paper has charms of its own, of course — perhaps the most important being that you can enjoy it almost anywhere, without power or connectivity.

But the Sunday paper is a behemoth, even in this era when newspapers are struggling, so deciding how to attack it is a challenge. Some people have finely honed strategies, but for me deciding what to read first is where the opposite of showrooming comes in: I like to check the online edition to see what other people are reading and emailing, and use that as a roadmap to the physical newspaper. I still get the serendipity of seeing what’s adjacent and near to the things I read — this is one of the most touted benefits of reading a physical newspaper — but I also get to tap into the wisdom and guidance of the crowd of online Times readers.

Two questions come to mind: First, what word or phrase best fits this practice? Ideally, the term would convey the digital-to-analog flow of information, as well as the crowd-sourcing power. And second, what are other fields of activity or commerce where online activity informs and guides physical, offline actions?