When the subject of technologies commercialization approaches comes up, the most popular solutions usually described contain the sale of a technologies or developing a company about technologies by promoting solutions or offering licenses or subscriptions to technologies-primarily based options.
In this series, we will appear at technologies commercialization solutions that are significantly less generally discussed. In Component 1, we go over how firms may possibly be capable to use open supply software program (OSS) as a commercialization tactic. In a forthcoming Component two, we will concentrate on the selection to “white label” technologies as a commercialization tactic.
WHY OPEN Supply?
We have highlighted problems associated to OSS in a quantity of weblog posts: we spoke about trends in leveraging OSS, as properly as problems to think about in the context of representations and warranties in M&A transactions. Our colleagues also discussed company dangers linked with the use of OSS.
In this post, having said that, we turn our concentrate to why a company may possibly decide on to pursue an open supply tactic and how companies may possibly nonetheless get industrial advantage from OSS.
The central notion of OSS is to leverage the breadth and depth of the developer neighborhood, which assists in identifying and eliminating bugs and safety problems, as properly as enhancing software program functions and user knowledge primarily based on user feedback.
This remains the core advantage of OSS-primarily based companies: as demonstrated by a RedHat report on the state of enterprise open supply, 89% of respondents saw enterprise open supply as a lot more safe or as safe as proprietary software program. On the other hand, open supply firms have also proved that they can be lucrative companies, and a handful of current initial public offerings in the sector prove as significantly.
OSS COMMERCIALIZATION Possibilities
Just before we appear into how OSS owners can make funds, it is worth mentioning that the industrial accomplishment of OSS is largely attributable to (i) the scale of interest in the solution from each the developer neighborhood and clients in order to use the core advantage of open supply as highlighted above and (ii) the credibility and reputation of the OSS owner, as cybersecurity problems are generally major priority for clients. Now, let’s turn to the solutions.
Open But Not Absolutely free
Though OSS is generally perceived as a absolutely free software program, that is not necessarily the case. The creator may possibly publish the supply code beneath a license that would limit the use and modification rights or impose an revenue-sharing obligation on the licensee if a solution embedding the software program is commercialized, which incentivizes possible industrial customers to enter into a separate industrial license with the creator.
This selection is also named restrictive licensing and has been criticized by the open supply neighborhood as departing from the original intent of OSS. Note that converting to a restrictive license following a solution was initially marketed with no any restrictions may possibly not be properly received by customers (see our coverage of the Dungeons and Dragons case earlier this year).
Absolutely free vs. Paid Versions
This selection is often named dual licensing, as the software program owner may possibly let absolutely free use of the software program with standard solutions but will charge a charge for the versions that contain further functionality or are intended especially for enterprise use. This pricing tactic is often named “freemium.”
Open Core
A variation of the dual licensing model is identified as the “open core” model. In the open core model, the developer open-sources the majority of the code and permits it to create as an ordinary OSS, but keeps specific functions and functionality proprietary and accessible for industrial licensing.
For instance, envision a browser or mobile operating technique that comes with a marketplace of add-ons and extensions produced by the owner as properly as independent developers, exactly where some of these add-ons and extensions are accessible for a charge.
Hosting
Due to the fact not all companies have the important capacity to deploy and run OSS, some vendors may possibly decide on to give a remote server to run the OSS with added functionality such as backups and upgrades of the OSS.
On the other hand, provided that remote servers typically are the territory of cloud vendors, there may possibly be competitors involving OSS developers and cloud vendors supplying OSS as a service with no further expense to the buyer. This competitors has resulted in some OSS providers which includes limitations in their licenses to avert promoting their software program as a service with no paying royalties.
Assistance and Consulting
OSS creators may possibly use their experience and give clients paid assistance in relation to OSS deployment, configuration, integration, coaching, or troubleshooting. There are distinct views as to regardless of whether this is a sustainable operational model lengthy term, as several would claim that OSS ought to strengthen more than time, and clients will not be inclined to continue paying following the initial deployment stage. As a outcome, some providers decide on to use this function collectively with proprietary functions compatible with OSS or with open core.
In addition to the above, there are a lot more approaches to raise funds, such as certification costs, crowdsourcing, branded distribution, or hybrid licensing, e.g., a so-named franchising model exactly where the OSS owner certifies chosen partners to develop into “authorized” vendors of the OSS and they use one particular of the commercialization approaches and spend a charge to the OSS owner.
