From a philosophical point of view, everybody loves open source software: you, your wife or girl friend, your father, your mother, grand-father or grand-mother, your children, your boss, your employees, your custormers, your students, your teachers, your cat even your fish, everybody.
Once the first enthusiasm gone (it takes arount 10 minutes for persons and 3 sec. for the fish), a simple question arises : ok, open source is not gratis, however, a consequence of the open redistribution is gratuity, so how are you making a living with open source software ? Is it viable in the long term ?
The conference will present the mechanisms (the "business models") around open source software and especially those for software editors.
12. Pcs in the world
● Nber of PCs sold in 2007 : 271 millions
● 1 billion of PCs in the world
● 2 billions of PCs planned in 2012 ?
3% of energy expenses
20. Mandriva
One of the five main Linux solutions editors in the
world
The only european one
Quoted at Euronext stock exchange
80 people
500 contributors
Sold in 150 countries
Available in 80 languages
More than 3 million users
Offices in France and Brazil
21. Value chain
Cap Gemini OpenWide,
Atos, Eds, IBM Service IdealX, Linagora
Global Services companies
Level 4: Services
PostgreSQL, Jonas
Oracle, SAP, Proprietary Open Source ObjectWeb, Nexedi,
BEA, IBM
Applications Applications Nuxeo
Level 3: Applications
Mandriva,
Linux OS Redhat,
Novell/Suse
Level 2: Software platform
HP, IBM, Dell Hardware
Level 1: Hardware platform
Intel, AMD, Via Founders
Level 0: Chips and boards
22. ● 2 millions
● 90 000
● Angola
● Nigeria 11 000
● Brazil 25 000
25. A business model is a term used for a broad range of
informal and formal descriptions that are used by
enterprises to represent various aspects of its
business, including its purpose, offerings, strategies,
infrastructure, organizational structures, trading
practices, and operational processes and policies.
26. Dimensions
Taille (de l'entreprise, des clients, du CA, du
bénéf ce, des effectifs)
i
Domaine d'activité et spécialisation (ou pas)
Métier principal
Sources de revenues
Proximité au code source
Proportion de R&D
Organisation
27. QualiPSo Survey
Technical domain
2 111 7
4
3
Security eGovernment
4 13 Web/internet eLearning
Electrical Engineering Banking / finance
Infrastructure Knowledge management
5 Middleware Home appliance
Embedded electronics Energy generation and distribution
3 4 Medical Industry Automation
Multimedia Environment
Accouting (ERP...) Software for hardware (OEM)
4
9
3
5
4 8
30. Main activities - identity
● Information technology consulting – service
company
● Hosting of resources (hardware, software,
informations, ...)
● Hardware seller
● Proprietary software editor
● Open source software editor
● Distribution editor (software integration)
● Communication agency
● Law and business consulting activities
● Media company
31. Revenue sources
● Service
● Hardware
● Delay
● OSS for a price
● Hosting
● Branding
● Advertising
● Sponsoring
38. And the remaining
margin margin S
Support margin M
margin T
margin
t
en
margin
Maintenance pm
lo Insurance
ve
De
margin
Training
? Investments
Subventions
41. Source and community
Service company
n
tio
ic a Embedded
un
m m cy r
Co en ito
Ag Ed Hosting
Creator
Use
Bug report
Documentation
Contributor < 1%
Contributor [1,10%]
Community
Animation
42. Conclusion
● The future of Open Source funding is
insurancial in the professional market
● The future of Open Source is advertisement,
branding and “toll” for the consumer market
● To reach 2 billions of computers new markets
must be opened => cost diminution
● Open source is a viable economical model
that may become pre-eminent on other
economical models for software
44. Thanks
www.qualipso.org and the deliverable D2.1.3
April, for its white paper about free software
business models
Syntec for its synthesis 2007 about IT market
62. Summary
● Why?
● Who are you for talking to me like that ?
● Market
● Analysis grid
● Activities
● Revenues sources
● Domains
● Conclusion
63. WHY ?
Normally, everybody should be
supporting it
But what are we earning money with?
Key point to reassure potential users
Key point for setting up new activities
in new or existing companies
Linbox FAS – funded December 1996 –
bought out May 2007
64. WHO ARE
OSS business
YOU TO
models:
SPEAK TO ME
not a choice,
but ...
LIKE THAT ?
Engineer (ENSMM 1988 and ENSERG 1989)
specialized in digital micro-electronics
Research assistant at Institut für Datentechnik,
Darmstadt (1990)
Manager of digital electronics laboratory in the
signal processing department at TDF-C2R
(1991-1994)
« Advanced TV and multimedia » Team director at
the R&D center, THOMSON multimedia (1995-
1996)
Created Free&ALter Soft (12/1996)
Linbox buy out in 2001 => Linbox FAS
Product refocusing (LRS)
Buy out of Linbox FAS in 2007 by Mandriva
65. Market
● Economic and Social Impact of Software &
Software-Based Services - Smart 2009/0041
(Pierre Audoin Consultants)
● Software and Software Based Services
market in Europe :
● 2008 : 228.6 billion Euros in 2008
● 3.7% CAGR by 2012
● 2012 : 264.8 billion Euros.
68. Revenues for France
● Software revenue growth
● 2005 – 7%
● 2006 – 6%
● Software and hardware service revenues
growth
● 2005 – 7%
● 2006 – 6,5%
69. But small actors
● 1st european editor: SAP
● 2nd european editor: SAGE
SAP : – 8 billion € turnover in 2007 (it's pretty
few)
– 1 billion € turnover
(Truffle 100 study)
But benefits of France Telecom in 2007
was 8 billion €
70. Pcs in the world
● Nber of PCs sold in 2007 : 271 millions
● 1 billion of PCs in the world
● 2 billions of PCs planned in 2012 ?
3% of energy expenses
3% energy = air transport energy expenses
!!!!!
71. And linux ?
Normally, everybody should be
supporting it
But what are we earning money with?
Key point to reassure potential users
Key point for setting up new activities
in new or existing companies
Linbox FAS – funded December 1996 –
bought out May 2007
72. 1,2 %
30%
France
Desktop
between 20 et 30 millions of Pcs
1,1% (AT Institute) of PCs under linux :
between 220 000 et 330 000
Server ?
Majority of web servers are under linux
World
~ 1 billion pcs
~ 11 millions of pcs under linux
73. What is
open source ?
Open Source implies that everyone can
share the software, and that leads the
software to be free (in price), even if it's
not imposed or needed by the licence
But how to create an economical activity
with something free of charge?
74. Free to ...
download/distribution
use
modification
distribution of modification
Open Source implies that everyone can
share the software, and that leads the
software to be free (in price), even if it's
not imposed or needed by the licence
But how to create an economical activity
with something free of charge?
76. Free of charge
=
Free of any
business ?
Metro newspaper
Museums
Web sites
Education (not everywhere)
Wifi in some towns
Non paying televisions
Skype calls
Local phone communications
...
Free and business are common
77.
78. Mandriva
One of the five main Linux solutions editors in the
world
The only european one
Quoted at Euronext stock exchange
80 people
500 contributors
Sold in 150 countries
Available in 80 languages
More than 3 million users
Offices in France and Brazil
79. Value chain
Cap Gemini OpenWide,
Atos, Eds, IBM Service IdealX, Linagora
Global Services companies
Level 4: Services
PostgreSQL, Jonas
Oracle, SAP, Proprietary Open Source ObjectWeb, Nexedi,
BEA, IBM
Applications Applications Nuxeo
Level 3: Applications
Mandriva,
Linux OS Redhat,
Novell/Suse
Level 2: Software platform
HP, IBM, Dell Hardware
Level 1: Hardware platform
Intel, AMD, Via Founders
Level 0: Chips and boards
80. ● 2 millions
● 90 000
● Angola
● Nigeria 11 000
● Brazil 25 000
2 million downloads of each Mandriva release
90 000 computers in a big French administration
Angola
Tutorials, development of Angolinux, deployment
Nigeria
11 000 Classmate PC using Mandriva
Brazil
25 000 machines with Mandriva sold each month
by Positivo
83. A business model is a term used for a broad range of
informal and formal descriptions that are used by
enterprises to represent various aspects of its
business, including its purpose, offerings, strategies,
infrastructure, organizational structures, trading
practices, and operational processes and policies.
A lot of dimensions in the universal sample space:
Customers
Size
Field of activity
Activity
Revenue source
Closeness to source code
Repartition between technical and commercial
staff
R&D proportion
...
One company = one combination of factors
Our goal is to identify and show some winning
combinations
84. Dimensions
Taille (de l'entreprise, des clients, du CA, du
bénéf ce, des effectifs)
i
Domaine d'activité et spécialisation (ou pas)
Métier principal
Sources de revenues
Proximité au code source
Proportion de R&D
Organisation
85. QualiPSo Survey
Technical domain
2 111 7
4
3
Security eGovernment
4 13 Web/internet eLearning
Electrical Engineering Banking / finance
Infrastructure Knowledge management
5 Middleware Home appliance
Embedded electronics Energy generation and distribution
3 4 Medical Industry Automation
Multimedia Environment
Accouting (ERP...) Software for hardware (OEM)
4
9
3
5
4 8
The main ones for open source software are :
security
internet
infrastructure
network
File, mail, communication or ... server,
Office automation
Game
Multimedia
Accounting, ERPs
Many fields
All fields
86.
87. Customer
size
Expertise
Rules of thumb :
* you do business with entity of with the same
size order than you,
* if not (you are a small company selling to a big)
you must have a very specialised expertise to
appeal to big companies,
* if you sell to small companies, you will sell a
very wide expertise (« I take care of your
computers ») but obviously not as deep.
The figure above represent that.
88. Main activities - identity
● Information technology consulting – service
company
● Hosting of resources (hardware, software,
informations, ...)
● Hardware seller
● Proprietary software editor
● Open source software editor
● Distribution editor (software integration)
● Communication agency
● Law and business consulting activities
● Media company
A software service company sells time and
knowledge/expertise
expertise on proprietary software
Expertise on open source software
NO DIFFERENCE !!!!!!?????
Added value ++
In the detail :
●Consulting
●Training
●Set up
●Support
●Outsourcing
●Integration
●Customisation
●Development
●Certification,
●
89. Revenue sources
● Service
● Hardware
● Delay
● OSS for a price
● Hosting
● Branding
● Advertising
● Sponsoring
● Service (selling of time and expertise)
● Hardware
● Publicly publish with a delay (immediate access
for a price)
● Open source software distribution for a price
● Hosting
● Sources linked to gratuity and image
● Branding (teeshirt, teapot, club Mandriva, trade
licence sell, ? Franchise ?, ...)
● Advertising
● Sponsoring (Google => Mozilla, Intel, HP, club
Mandriva, ...)
90. Revenue sources
● Insurance / warranty
● Toll
● Subventions
● Dual-licensing
● Proprietary software
Insurance / warranty
« Toll » if a financial exchange is done
If a financial exchange is done from the OS
(buying of music, of video, of a game, of a
software, ...) => the distribution editor allows
this financial exchange => he should get some
money for this service (Amarok).
Subventions (for creating an open source software)
Creation of a good which is to the disposal of
everybody => giving subvention is fairly logical
as it may benefit to all.
Dual-licensing :
Imposes a copyright transfer for contributors =>
slows down the dynamic around the project
Proprietary software (extension)
Requires a structure or a licence adapted (Apache,
BSD style, Mozilla)
91. Revenue sources
Revenue sources
Consulting
OSS for a price
Infinite support
Hosting
Dev. - customisation
Support
Training Linbox
Subventions Europe-B
Proprietary extensions / software Europe-A
Proprietary ext. Europe-C
Features
Tax credit
Mandriva
JEI
Red Hat
Branding
EBM Websourcing
Hardware
Europe-D
Certification
Provide OSS software with delay
Dhooges
Dual licensing Logilab
Publications
Advertising
Sponsoring
Other services
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
percentage
92. Problem : the lever effect
€ service € Software
costs t t
revenues
93. Lever effect for open source software
edition ?
margin margin S
Support margin M
margin T
margin
t
en
m
Maintenance
lop
ve
De
margin
Training
?
Revenues without lever effect !!!!
94. The key to development f nancing
i
margin margin S
Support margin M
margin T
margin
t
en
m
Maintenance
lop
ve margin
De
margin
Training
?
Unlimited Support =
In case of problem, all means will be taken for this
problem to never occur again => insurancial
dimension of support = lever effect.
95. Insurancial
dimension
?
Only advantages ...
For the customer
●Cost control on a function
●It's better for the editor to minimize the support, and
that means developing a great quality product →
virtuous circle
●Adding functions for developing the installed basis
For the editor
●Recurrent and continuous revenues, corresponding
to the production economic reality
●Capacity to foresee revenues
96. And the remaining
margin margin S
Support margin M
margin T
margin
t
en
margin
Insurance
m
Maintenance
lop
ve
De
margin
Training
? Investments
Subventions
99. Source and community
Service company
n
tio
ni ca Embedded
u
m m cy r
Co e n ito
Ag Ed Hosting
Creator
Use
Bug report
Documentation
Contributor < 1%
Contributor [1,10%]
Community
Animation
100. Conclusion
● The future of Open Source funding is
insurancial in the professional market
● The future of Open Source is advertisement,
branding and “toll” for the consumer market
● To reach 2 billions of computers new markets
must be opened => cost diminution
● Open source is a viable economical model
that may become pre-eminent on other
economical models for software
102. Thanks
www.qualipso.org and the deliverable D2.1.3
April, for its white paper about free software
business models
Syntec for its synthesis 2007 about IT market
104. Annexes
A software service company sells time and
knowledge/expertise
expertise on proprietary software
105. What does sell
a service
company ?
A software service company sells time and
knowledge/expertise
expertise on proprietary software
106. What does sell
an open source
service
company ?
Expertise on open source software
NO DIFFERENCE !!!!!!?????
Added value ++
In the detail :
●Consulting
●Training
●Set up
●Support
●Outsourcing
●Integration
●Customisation
●Development
●Certification,
●Migration process
●certification / quality
107. Not
concentrated ?
Steria, On-X
Apitux, Librenberry, Free Electrons,
Silecs, Cliss XXI, Pragmatic Source, Ars
Aperta, Merethis, LDD, Nereides, Siloh,
Bearstech, Netaktiv, Easter Eggs, Alcôve
Libreboot, Alca Torda, Sfwan, Open Via,
Pi-Lyon, Zefyris, Exemole, Eitics, Alter
Way, Code Lutin, Ambika, Infoclip,
Itaapy, Atreal
....
Today : development of many small local
actors and market structuration through
big and/or specialized actors (AlterWay,
Linagora, Mandriva, ...)
108. Resource
provider ?
Pure hosting :
●Put machine and bandwidth to disposal
●Physical access (power on / off / BIOS / reparation)
●Simplified remote command line access
●Automatisation of set up (Dedibox, Gandi, ...)
●With a SLA (time to replace a machine, guarantee
on power supply, bandwidth, ...)
Added value hosting
●monitoring
●backup
●maintenance/system updates
●support
Application hosting
●groupware, mail server, ERP, web site,
ecommerce, ...
High Performance Computing
Information provider (web sites)
109. Hardware
seller ?
DivX player
Tivo
TomTom
Some wifi / ADSL router / modem
Archos
Tooling machines
HPC vendors (sun, SGI, Bull, Nec, ...)
Embedded linux
●++
●Any people who need a standard software stack
(network, hard disk, audio or video stack, http
streaming, http, ssh, ...)
110. Proprietary
software
editor ?
All models around double licensing :
Open version – proprietary version => Mysql,
Trolltech, ...
Editor using open source basis
Very common in the java world. Proprietary
product including java, struts, tomcat, apache, ...
IBM, tomcat, websphere
IBM, Eclipse, => Rational offer
Zend (php)
Linbox FAS (Linbox Rescue Server)
112. Distribution
editor ?
RedHat, Suse Novell, Ubuntu, Mandriva, Centos, ...
An economic activity
That do not work without the remaining of the open
source ecosystem
115. Communication
agency ?
Communication around a project
Animate the community
Eclipse fondation Eclipse
Apache fondation
Mozilla fondation
116. IP specialist ?
Provide service and warranty for the legal aspect of
OS
no proprietary « contamination » => Open source or
Open source => proprietary (black duck)
Warranty against patent attack or any other legal
attack