When the subject of expertise commercialization methods comes up, the most typical choices sometimes talked about embody the sale of a expertise or constructing a enterprise round expertise by promoting merchandise or offering licenses or subscriptions to technology-based options.

On this sequence, we are going to take a look at expertise commercialization choices which are much less generally mentioned. In Half 1, we focus on how corporations might be able to make the most of open supply software program (OSS) as a commercialization technique. In a forthcoming Half 2, we are going to concentrate on the choice to “white label” expertise as a commercialization technique.

WHY OPEN SOURCE?

We have now highlighted points associated to OSS in a variety of weblog posts: we spoke about tendencies in leveraging OSS, in addition to points to think about within the context of representations and warranties in M&A transactions. Our colleagues additionally mentioned enterprise dangers related to using OSS.

On this publish, nevertheless, we flip our focus to why a enterprise might select to pursue an open supply technique and the way companies should still obtain business profit from OSS.
The central thought of OSS is to leverage the breadth and depth of the developer group, which helps in figuring out and eliminating bugs and safety points, in addition to enhancing software program options and consumer expertise primarily based on consumer suggestions.

This stays the core advantage of OSS-based companies: as demonstrated by a RedHat report on the state of enterprise open supply, 89% of respondents noticed enterprise open supply as safer or as safe as proprietary software program. Nonetheless, open supply corporations have additionally proved that they are often worthwhile companies, and some current preliminary public choices within the sector show as a lot.

OSS COMMERCIALIZATION OPTIONS

Earlier than we glance into how OSS house owners can become profitable, it’s price mentioning that the business success of OSS is usually attributable to (i) the size of curiosity within the product from each the developer group and clients as a way to make the most of the core advantage of open supply as highlighted above; and (ii) the credibility and popularity of the OSS proprietor, as cybersecurity points are sometimes high precedence for patrons. Now, let’s flip to the choices.

Open However Not Free

Whereas OSS is usually perceived as a free software program, that isn’t essentially the case. The creator might publish the supply code underneath a license that might restrict the use and modification rights or impose an income-sharing obligation on the licensee if a product embedding the software program is commercialized, which incentivizes potential business customers to enter right into a separate business license with the creator.

This feature can be referred to as restrictive licensing and has been criticized by the open supply group as departing from the unique intent of OSS. Observe that changing to a restrictive license after a product was first marketed with none restrictions will not be properly acquired by customers (see our protection of the Dungeons and Dragons case earlier this yr).

Free vs. Paid Variations

This feature is usually referred to as twin licensing, because the software program proprietor might enable free use of the software program with fundamental choices however will cost a charge for the variations that embody extra performance or are meant particularly for enterprise use. This pricing technique is usually referred to as “freemium.”

Open Core

A variation of the twin licensing mannequin is named the “open core” mannequin. Within the open core mannequin, the developer open-sources nearly all of the code and permits it to develop as an strange OSS, however retains sure options and performance proprietary and obtainable for business licensing.

For instance, envision a browser or cellular working system that comes with a market of add-ons and extensions created by the proprietor in addition to impartial builders, the place a few of these add-ons and extensions can be found for a charge.

Internet hosting

As a result of not all companies have the mandatory capability to deploy and run OSS, some distributors might select to supply a distant server to run the OSS with added performance equivalent to backups and upgrades of the OSS.

Nonetheless, provided that distant servers typically are the territory of cloud distributors, there could also be competitors between OSS builders and cloud distributors providing OSS as a service with out additional value to the shopper. This competitors has resulted in some OSS suppliers together with limitations of their licenses to forestall promoting their software program as a service with out paying royalties.

Assist and Consulting

OSS creators might make the most of their experience and provide clients paid assist in relation to OSS deployment, configuration, integration, coaching, or troubleshooting. There are totally different views as as to if this can be a sustainable operational mannequin long run, as many would declare that OSS ought to enhance over time, and clients is not going to be inclined to proceed paying after the preliminary deployment stage. Consequently, some suppliers select to make use of this characteristic along with proprietary options suitable with OSS or with open core.

Along with the above, there are extra methods to boost cash, equivalent to certification charges, crowdsourcing, branded distribution, or hybrid licensing, e.g., a so-called franchising mannequin the place the OSS proprietor certifies chosen companions to grow to be “licensed” distributors of the OSS they usually make the most of one of many commercialization methods and pay a charge to the OSS proprietor.