The Open Source Business Model

If you are not familiar with the Open Source business model, the code is free and downloadable to everyone a code sharing site such as GitHub or Bit BucketAnyone who is interested can read through the code and see exactly how it works.

In the early days of computing, this was the norm. Most people learned how to code by reading other peoples code. There was a huge advancement in computing and personal computing as a direct result. This open community made groups like the Homebrew Computer Club possible. 

Fast innovation because of the accessibility of massive code libraries that can power small changes with huge value are what make Open Source a clever business model. You can quickly understand your customer’s needs and many individuals you may not expect, make contributes to your core product. 

. to make improvements, but as part of the open source license, you are required to publish your improvements. This is done through a Pull Request. It’s called a Pull Request because the admin of the GitHub page will pull the code from your machine. 

So how do you make money if you give away the code? Nextcloud makes cash by offering white glove support and guaranteed stability. a

You Are Required To Repost Your Code

If you download open source code and make changes / improvements, you are required to publish your improvements through a Pull Request. It’s called a Pull Request because your code is pulled from your machine. 


How To Make $$$ With Open Source

Open Source software companies make their cash by offering white glove support and guaranteed stability of their, often very complex, software packages. Although the code is free, not everyone will have the experience or staff to manage a cloud-based CRM, cloud file server, Iot device, etc. So the companies that offer these systems offer to take care of that for you, for a price. Think RedHat Linux. 

Open source hardware makes its cash by leveraging economies of scale, and customer time savings from having to figure out how to source the parts, build the boards, manufacture the parts, cut the molds, and ensure quality control. The people that go through all of this will be some of your companies’ greatest assets because they improve your products the most.  Usually if someone does a Open Source build on their own, it is for learning, to make improvements, or to add some functionality. 

Open Source Advantage

Open Source can innovate past it’s closed source competitors. The markets are also much deeper. Good open source companies designed their products to be modular, meaning your product can morph into anything. A 3D Printer can become a laser cutter for example. If it was made to print plastic, it can be hacked to print living cells and print hearts. 

Closed source, means you will have to research that market, get your engineering team aligned behind it, get all of the resources in place, put off some other innovation your team could be working on, market that new product line, and hope it works.

With open source, these new items arrive at your doorstep by professionals and enthusiasts alike. The market can do as it likes and you can choose what to officially support and sell. Since it is open source, you have as much access to the improvement as anyone and you have the deep market knowledge to execute on new innovations better than your competitor. 

Some Notes:

Although the software is free, and documentation is available, I have often seen, there are one or two rather critical items glossed over. It may take hours of searching for the solution, sometimes the solution will not come from official sources.

If the user is a hobbyist, that might be fine. If the user’s servers are running open source software to handle millions of people’s 401K accounts or maybe the hosted files are for a government contractor that designs military equipment, these companies / users will go with the experienced support. 

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