Linux and the Open Source Model: Does It Work?

Does the Open Source Model work better than its commercial alternative? This post comes on the heels of one of my fellow Staff Writer's posting the story, "A Modest Idea: What If Microsoft Open Sourced Windows?" And I'm aiming this commentary at Microsoft too but it applies to any company who seeks profit over what is fundamentally correct behavior in the marketplace. I'm not against anyone making a profit. Profit is good. Forfeiting good business sense and sacrificing employees in the name of profit are bad.

Steve Ballmer announced the other day that Microsoft is joining the host of other companies by laying off thousands of workers. In his company-wide email, he blamed the poor economy for the layoffs.

"But it is also clear that we are not immune to the effects of the economy. Consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures."

Yes, it's true that the economy is not great right now but I don't suppose their layoffs have anything to do with the dismal performance of Microsoft's flagship desktop operating system, Vista, does it? Nor does it have anything to do with the fact that many are turning away from Microsoft in record numbers because of his poor performance as well.

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Red Hat’s open source model thriving in downturn

While some might argue that it’s too early to call, Red Hat’s open source model seems to be paying dividends despite the soft economic climate. Could penny-pinching managers looking for cheap solutions be a boon to the open source industry?

Red Hats revenue grew 22 percent to $165.3 million in the third quarter over the same period last year. This resulted in net income of 24 cents per share which beat Analysts’ expectations of 18 cents a share.

In fact, Red Hat’s position was solid enough that it took the opportunity to repurchase six percent of its outstanding shares, strengthening its position by approximately $11 million. The company is planning to continue buying up stock to shore up the company’s resistance to the recession.

Red Hat CEO Jim Whitehurst find that in a, budget-constrained environment, IT professionals are adopting open source and more specifically Red Hat to save money and enhance their competitiveness.” By building their operating system on code contributed by the open source community, Red Hat’s Enterprise Linux is a more cost effective server than proprietary alternatives.

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Open Source Business: Model or Tactic?

ReadWriteWeb points readers to a report released by the 451 Group stating that open source is not a true business model, but more of a "business tactic."

Traditionally, the "open source business model" is perceived as "free/open software, with paid support and configuration services." The report found, however, that many of the responding open source businesses incorporate some commercially licensed software in their product line. It also found that the "paid support/free software" idea -- while theoretically, at least, valid -- is multi-layered, complex, and highly variable between software product, software company, and industry.

The research included 114 open source vendors, including Red Hat, Alfresco, IBM and Oracle. Of all the vendors studied, 70% offered support services, but less than 8% called their support services their primary revenue stream. The 451 Group stated that they realized the inclusion of "proprietary vendors" (as opposed to the broader definition of "vendor," which could include those making open code available on a mirror) would possibly skew the results, so the research centered mainly on businesses specializing in open source.

It's not surprising that these vendors, which vary in size and customer base, use different methods to keep themselves afloat. It's not terribly surprising that licensing weighs heavily on how development, support, and revenue-generation strategies are formulated.

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Open Source a successful business model

Today, open source beyond Linux, is proving itself to be a tremendously successful business model. Secure, reliable, flexible Linux and open source software is rapidly complementing commercial software in customer engagements that include standards-based hardware platforms, software, and services.

In an exclusive with Genevieve Khongwir, CIOL, Dr. Guruduth Banavar, Director, IBM India Research Laboratory highlights on IBM's role to the open source community along with India's adoption and trends of the industry. Excerpts:

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What is the open source technology model?

Open Vs Closed

To understand best how open source technology is developed, we can compare it to traditional closed source software produced by companies such as Microsoft.
Open source software is based around the idea that the user can not only view, but change the source code of an application.

Closed source software is hidden to prevent the user either viewing or changing the code.

After initial production, open source software is released to the development community and undergoes a secondary phase of evolution. It is scrutinised by thousands of professional developers across the globe who highlight potential flaws, bugs and security glitches. These suggestions and improvements are fed back to the developer who considers them for inclusion in his application.

Closed source software is developed in isolation with a small team of developers. It isn't possible to build a team of hundreds to check the code because the code is deemed proprietary and secret. Bugs and security flaws are often not found until after a product launch when a steady stream of security patches and updates are required.

Open source isn't just about having your own applications de-bugged for free. By releasing new applications to the community, we are helping new generations of developers learn how to code. These new developers create their own applications, which are fed back into the community and rapidly advance the growth of the whole system.

It is open source technology that has fuelled the growth of the Internet over the last six years with key applications such as Sendmail, Linux, Apache and WebStore, languages like Java and Perl, and mark-up languages such as HTML, WML and XML.

It is these same open source methods that have made eXtropia the standard for web applications and the head of a global open source development community.

Source : http://www.extropia.com/