Most open-source companies are following a similar business model where they give the software away for free and charge for service and support. Are there limits to that business model? What kinds of companies could get burned?
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The common model for open source companies is to give away the software, and provide service, support, proprietary add-ons or some combination of these. Service can take many forms, from code customization to application hosting to training/mentoring to consulting. To really make this model work, however, the company has to establish itself as the definitive source for these services. If a brand is not established early, a competitor could step in to either fork the code or simply offer the same services.
This was first published in May 2006
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