Why open source? Companies have many
different reasons for embracing open source ranging from idealogical
beliefs to economic and business arguments to technological motives.
In most cases, companies based on open source software probably have
several reasons for choosing open source. In this blog entry, I want
to explore just one of the many benefits of having a business model
based on open source software: Open Source as a Marketing Strategy.
There are many different open source
business models, but most of us generate revenue through the sales of
value added services of some type: support, training, documentation,
consulting and more. In contrast, many proprietary companies also
have licensing revenue as a significant revenue source. This
difference results in questions like “how do you make money if you
give your software away?” or “how do you make people buy support
from you?”, and these questions often come from very smart people
with dozens of years of experience in software. My favorite answer
to these questions is “you need to think of open source as a
marketing strategy!”
Since Compiere is freely available for
download, anyone can install the software, try it, and see if they
want to use it in their environment. Many of these people will never
generate any revenue for Compiere, but maybe they tell a few other
people about Compiere, and maybe those people tell a few more people
... This viral marketing helps to promote and market open source
products with little involvement from companies like Compiere.
Having an open source business model can generate a level of
awareness that might otherwise cost a substantial amount of money to
achieve through trade shows, advertising, etc.
Using open source as a marketing
strategy requires a shift in thinking for anyone coming from a
proprietary background. As open source companies, we need to
encourage people to download our software for free – the more, the
better! It does not matter to me that someone gets our software for
free without paying Compiere a dime. Yes, they are benefiting from
our hard work without giving anything in return, but all I need is
for them to tell someone who will eventually want to attend training
or purchase some type of support or other services from Compiere.
Open source companies also need to be a
bit careful not to be too heavy handed with pushing people into
revenue generation. We cannot (and do not want to) force people into
purchasing support agreements or other services, because this would
severely limit our ability to benefit from open source as a marketing
strategy. Instead, we need to provide compelling services (support
and others) that benefit our customers. Those customers who need and
want our help will pay for it.
Open source as a marketing strategy can
also have a dark side. Your product needs to be really good for this
strategy to work. Otherwise, the negative publicity can irreparably
damage the product's and the company's reputation. Even with a great
product, people can expose every little wart, and when you mess up,
they will let you (and everyone else) know about it. I like to think
that this feedback just helps keep us on our toes.
Despite the dark side, open source has
a marketing strategy has its advantages. The viral marketing of the
tell a friend variety can get quite a bit of awareness for a product
in a short amount of time. As long as you embrace the need to think
about marketing in a slightly different way, open source can be a
great marketing strategy.
