In June 2001, Progeny Linux Systems was in crisis. Looking around, co-founder and CEO Ian Murdock realized that the company needed fundamental changes to survive. Four years later, Progeny is back up to its former staffing levels and showing modest profits. It is also one of the few Free/Open Source Software (FOSS)-based companies from that era to survive.
…of this and other, similar articles, there seems to be a general trend: there’s not much of a market for IT products since 2001, as opposed to IT services. For products, it ends up coming down more to who you know, rather than what you know. A real shame.
But the other points are right on: if you don’t plan out your business properly, you’re stuffed.
It’s refreshing to see a company founder willing to do whatever it takes (including stepping down as CEO) to save his company. Most people starting up a business aren’t very flexible. Murdock realized that his company was doomed if it tried to continue the course it started on. Instead he was able to take his failed product (because it was technically excellent) and establish enough credibility that he could change his company from producing a product to providing services. That shows fexibility, humility, and common sense that’s rare in a business. No wonder his staff like working there.
http://shots.osdir.com/slideshows/slideshow.php?release=177&slide=2…
So is the ONLY business model for open source software to provide services for large corporations with huge budgets?
What other business models actually WORK IN PRACTICE (read: produce a steady stream of profit) for Open Source Software?
I remember when it IT-bubble burst, the company i worked for went from 103 employees to 30(!) (now they’re actually five employees, and they’re making profit! =). Noone in the work force trusted the leaders at all (and they sure as hell didn’t cut their huge salaries to save staff).
I was lucky enough not to get sacked, but every once in a while when the bosses at my current company call out for a staff meeting i get shivers down my spine. Very weird days, but in a way i’m glad i experienced it nevertheless.
But the point of open source isnt to provide profit, its to provide software and associated freedoms.
That may be your goal, but I have to buy food to eat as I’m not a farmer and they don’t take software patches at the super market for food as a trade.
The CEO of Progeny went off-salary and got a different job so he wasn’t a drain on Progeny’s economy, that’s an amazing act of dedication to a project, also the fact that he stepped down as CEO when he knew that he wasn’t capable or experienced, THAT shows someone who is down to earth.
All that asside,
the purpose of any business, even non-profit ones, is to stay in business. Progeny is a company, not a volunteer effort.
The only markets I can see for open source software business are, selling support / customization services to large companies, acting as remote network administrators (not developing, just maintaining networks based on open source software and writing scripts, etc,) or selling hardware that contains open source software like the Neuros or Zaraus or GP32 (all of which do not do very well compared to their competition in saturated markets, even though each of those products is exceptional in their own right,) or bidding on single-contract application customizations for companies (which isn’t steady work.)
I was asking if anyone knows of another business model that actually at least sustains itself using open source software. These are the only examples put into practice that I can think of.
“So is the ONLY business model for open source software to provide services for large corporations with huge budgets?”
It works for small and medium sized businesses as well. In fact, there might very well be more opportunity there than the big businesses, because the small to medium sized businesses keep smaller IT staff (smaller budgets), and thus have a greater need for custom services.
The software as a service is really the business plan of the future, at least for businesses and government agencies. The reason for this is that there is no “one size fits all”. All organizations have very specialized needs. This leads to the idea of providing a free or very cheap based product, like Progeny Debian, then provide custom services based on that product. Linux / FOSS is perfect for the software as customized services business plan.
I have to give major kudos to Ian Murdock and Progeny. First, Ian Murdock is the founder of Debian, and now he has forged a successful business plan based on Progeny’s customized, enhanced version of Debian, and they managed to survive through the dot com bust.
I can see Progeny, Red Hat, and Ubuntu to be the leading successes in the business of Linux distros, as they are offering essentially free products (Fedora Core for Red Hat), and basing their revenue streams on customized services based on the distribution. Good stuff – both for these distros and their customers, and for the Linux enthusiast crowd.
I lik there original business plan..”hey dudes lets create our own debian based Distro! and distribute it for donations…we will be GODS!” Goes to prove that just becasue you are a code wizard, that alone doesn’t make you a smart business person..hell most coders i know can’t even design a usable UI..its works for them!
I firmly believe in the top-down slice-and-dice executive management style. Make executives “at-will” employees just like the base. It the CEO doesn’t like your work in the morning when he wakes up – see ya. I have seen this work well in small companies. It also allows for some creativity and talent to actually rise from the team or company members.
As far as a Linux distribution. Let freedom and the free-and-open market ring. If they can make more cash by shelving propietary garbage them more power to the company. As-it-is-said, business is business.
Maybe I should make my own distribution now that I know how to actually do it.
So is the ONLY business model for open source software to provide services for large corporations with huge budgets?
Dual licensing has also proven to be a pretty successful model for some open source companies (eg., MySQL AB & MySQL, Trolltech & QT, Sleepycat & BerkeleyDB, Digium & Asterisk).
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I can see Progeny, Red Hat, and Ubuntu to be the leading successes in the business of Linux distros, as they are offering essentially free products (Fedora Core for Red Hat), and basing their revenue streams on customized services based on the distribution. Good stuff – both for these distros and their customers, and for the Linux enthusiast crowd.
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You missed Novell. They have SUSE Professional which they give away for free. But wait….Red Hat doesn’t provide support of any kind for Fedora Core and the same goes to Novell with SUSE Pro.
CEOs don’t want a free product, they like paying out their ass because they think the product is “better”.
Progeny was ahead of it’s times when it was first released, now it’s behind current times. SuSE wins hands down.
As mentioned in passing in the article, Progeny wrote Discover, which provides hardware detection for new Debian Installer. Thanks!
I must say Discover has better architecture than Kudzu, the Red Hat counterpart.
“Red Hat doesn’t provide support of any kind for Fedora Core”
incorrect. fedora does provide support by giving away bandwidth, developing and maintaining a distribution for the lifecycle, mailing lists and sponsoring fudcon and so on. what you dont get is a commercial formal support