Saturday, May 12, 2007

Software distribution business models

Open source model vs. Proprietary business models

Software distribution has changed a lot, as we all know…
So what’s the take on these models?

Proprietary model: Typically a company sells their product with or without customization and charges the users for a certain period for a license to use the product. Also an x% of that whole fee is for support/maintenance. But what happens if the user wanted to change the product, for which they have to only bank up on the company who sold their product. There is no way of modifying things by their own since the seller does not ship the source code. So obviously for a given product range, the seller tries to become a monopoly.

Open source model: This is the new era of distribution, were things are shared across to everyone. The biggest advantage is that there is a big community for any given open source product and this keeps on inventing new things on top of the existing source. And the company that introduced the product in to the open source stream also gets a constant check for itself to stay on top for inventing things. The vendors charge enterprises using the products, since they customize things for them. The biggest insurance that the enterprise using these products has is that, there is source code and the open source community to support the product. Also there is value for every $ that is spent, since the vendors can charge only if their on top for adding better values.

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