Open Source Business Model - Part I

Open Source Software is the most disruptive business model in tech industry in the last decade. Still there are lot of myths, confusion, skepticism around it among developers,enterprises, software companies, channel partners etc. That includes me too. This is true especially when we see an Open source company clocking double digit growth in recession (Redhat) whereas another behemoth opensource company fails(Sun).So in an attempt to better understand opensource I am planning a series of blogs profiling opensource business model, its strategies, weaknesses, commercial open source companies, community opensource projects in the coming days. This blog is part 1 of the series. Here I introduce what is publicly understood agreed definition of Closed Source and OpenSource business model

Any computer software that is available with its source code in public is termed Open Source software. Where as proprietary or closed source software doesnt come with its code and the developer/company who came up with the software usually retains the source code and doesnot share it with the public.

The closed source model has been greatly successful for decades and is still the by and large the main business model in software industry. The general practice is, any company which creates the software, charges a premium for buying/using it. This doesnot include support,training, upgrades. It might charge for the additional services but the software as such comes with a price tag and without source code. Any patch or bug fixes will be done by the company that created the software because the source code is not shared.

Whereas a typical Open Source company doesnt usually charge for the product and it gives it free. So what is the revenue source for the company...? It charges for the documentation, bug fixes, and other attached services like system integration.

In the upcoming blog posts I will further deep dive into the OpenSource Business model which covers the licenses, community based development, revenue stream, Opensource Enterprises, etc.

My Write-Up published in Rediff.com

Rediff.com recently published my write-up about iPad. It is available here. I am also pasting it below...

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Apple's other iProducts are usually an improvement over existing products in that category and usually revolutionises the way people use them. A good example is the iPod which was not a brand new product in that category but it changed how people use it as part of their lifestyle. iPhone too is a good example.
But iPad's story is different. Though there are tablets/ handhelds/ pdas/ gaming consoles/ MIDs/ ebook readers already available, this machine doesn't fit any of the categories. It is a new product and is trying to create a new category of its own with all the above usages in mind. The usability and satisfaction should be seen in that context. In this regard, Apple's bold decision to introduce a new product is welcome.

It is a fine product just as any other Apple product. But there some quirks that needs to be mentioned.

One good example is how to hold this device? Whatever is the target purpose of this new device, either gaming or ebook or business device, the lack of a good holder/ handle to hold the device is a big disappointment. With a device of this size and with the glossy finish, I would have expected a way to hold the device safely, especially when the target audience of this device is frequent travelers.

Lack of camera, less pre-installed apps, flash are few other concerns.

Other major concern is Apple's proprietary attitude. The processor is Apple's own, OS is iPhone OS, app store is again totally Apple governed and the list goes on. If Apple expects it to be adopted widely, it sure might want to think about opening up some of these areas should not be hurting.

Otherwise this product looks awesome and might be a hit in India [ Images ] too. But wait, what I am saying? Apple had its flop products too.

-- Balaje Sankar, 28, Minneapolis, US


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How to Start a limited liability Company in India..??

Here is a nice blog entry which details how to establish a Limited Liability company in India. Click on the link below.

LLP in India

bJargons - I Marginal Revenue

It is the revenue per additional unit of an item sold. For eg lets say the price of an item A is 10$. And a company C sells 100 units on an average. So the revenue is 1000$. To sell an additional unit the company might have to reduce the price of the item. Why..? Since the item is priced at 10$, consumers are buying the product and the consumption is 100 units. To make the consumers to buy one more unit, the company needs to reduce the price for eg by .05 dollar. So the the price is 9.95$ now. Now the

Marginal revenue = Change in revenue/Change in units
which is
(101 * 9.95) - (100 * 10) / 101-100 = 4.95.

So the Marginal revenue is 4.95 against 9.95 that you might have expected.

Oracle hints on Sun SParc Assets Part II

With US DoJ approving Oracle-Sun deal, Oracle is slowly revealing its plans for Sun H/W assets. Here is another teaser/advt that Oracle runs about Suns hardware assets. I have seen this on most prominent web sites. It looks Oracle is willing to keep the Sun's Hardware business with itself and is ready to invest more on developing the same.
There is another angle to these teasers. The recent decision by EU to investigate possible antitrust issues in the deal has delayed it. It might take till mid January to complete the investigation. Already IBM and HP are grabbsing Sun's customers utilizing the uncertainity of the deal. The antitrust scrutiny can be dealt by either selling out MySQL or promise future development of MySQL. (I really love the words used by the Eurpean commissioner in his statement "The commission has to examine very carefully the effects on competition in Europe when the world's leading proprietary database company proposes to take over the world's leading open source database company" Oracle wants to thwart customers jumping ships and hence trying to clear the uncertainity by promising that it is still committed with Sun's Hardware.

Its not me alone but most of the experts still feel that Oracle might sell Sun's Hardware business to HP. And that makes real sense.

Oracle hints on Suns Sparc Assets

Here is a teaser that Oracle runs on its site. It might be a hint on what Oracle is planning with Suns Hardware assets.

Lets just wait till Oct 14 on the real intentions of Oracle.

VMWare acquires SpringSource

VMWare is acquiring SpringSource for around half a billion dollars.For the people who wonder what is a Virtualization/Datacenter has to do with a Java Enterprise application software company, you are not alone. I was too puzzled when I heard the news. Whatever the explanation CEO of VMWare gives or SpringSource's CEO gives it doesnt somehow add up. Yaa, these kind of acquisitions are not uncommon nowadays. Oracle's ongoing acquisition of Sun is one such example. Whereas Oracle is a Enterprise Software company, Sun is primarily a Hardware company. What on earth is Oracle going to do with Sun's RISC based assets...? Word is that Oracle has already decided to shelve Sun's ambitious ROCK processor project. Now will same sort of thing will happen with some of the assets of Spring Source. We will eventually see. For me, I would be happy someone buys redhat and keep a check on the self proclaimed guardian of Open source movement.