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Open-Business

Open Business Models

Keeping their intellectual property too locked up is certainly not healthy for any company in the business world. They not only miss out on important business innovations but also the wealth of knowledge that idea-sharing could generate. Open business models encourage collaboration with customers and suppliers to everyone's benefit.

MBAs favor the business model while engineers favor technology. Acquiring external technology with the ability to profit are the characteristics of open business models.

There are at least four known open source business models for making money with open source:

1. Support Sellers:

Also referred to as "Give Away the Recipe, Open A Restaurant" business model, here, one gives away the software product, but taking active part in selling, distributing, branding, and after-sale service. This is, for example, what Red Hat does.

2. Loss Leader:

In this open business model, one gives away open-source as a loss-leader and market positioned for closed software. This is exactly what Netscape is doing.

3. Widget Frosting:

This open source business model allows a hardware company to go open in order to get better drivers and cheaper interface tools. Silicon Graphics which supports and ships Samba, is an example.

4. Accessorizing:

Here, accessories like books, complete systems, compatible with open-source software pre-installed, are sold. Some clear winners: O'Reilly Associates, and SSC follow this open business model.

As more companies learn about open source business models, the more they realize how much they have to change their own innovation activities to take full advantage of these prototypes. To survive and achieve success, companies must adapt their business models to make them more open to external ideas and paths to market.

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