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Hat and Making Money with Open Source Software
 Technology
Users In Control
The cornerstone of the open source movement is
giving technology users control of the technology.
Proprietary software represents the industry’s feudal business
model because users are at the mercy of developers and their secret source
code. Open source software
makes partners of technology users because its source code is readily
available for users to make changes/alterations as they desire.
As
a phenomenon, open source fundamentally changes the foundation upon which
the software industry exists. The
software business is no longer predicated on writing software and
distributing it. Rather it
rests on delivering more value to the customer than the competition does
– namely software support and services in a shrink-wrapped box.
Customer Values
The
fast-paced software industry is a tough market upon which to gain entry
because it is one of the most competitive.
If only the paranoid survives, then Red Hat built its brand of
Linux by redefining customer values.
Red Hat concentrates on building customer relationships and making
partners of customers – namely, its definition of customer values –
while giving away its software technology.
Early
adopters recognize better technology and will acquire it.
As open source technology gains greater market share, support and
services for it become more important.
The free market benefit of symbiotic partnering is nonexistent in
the proprietary model. Open source gives customers a practical way of collaborating
when building and improving their businesses.
As transparent technology, open source provides well-informed
buyers with multiple choices of action ranging from in-house “fixes”
to complete consulting solutions. Since
open source code can be made reliable, Linux’s reliability continually
improves and sets the standard.
Customer Expectations
The
focus of business is on the customer, not the technology itself.
This strategy translates into knowing your customers and why they
buy. Since open source
systems work well with enterprise users, Red Hat targets them.
These people want and use Internet applications and functionality
across operating systems running on servers, personal computers (PCs),
handheld appliances, and embedded systems.
Red Hat sees its value added component tied to making it all seem
like a single, seamless platform and experience.
Other companies such as Corel and Caldera have niches that provide
customer solutions.
The
marketshare for proprietary software is disappearing. Consumer expectations are changing as free software and open
source gain popularity and public acceptance/adoption.
Open source improves efficiencies and provides value for which
consumers will pay. Consumers
will spend more on open source products/services if their specific needs
are met.
How to Succeed
Remain
close to customers and their preferences and they will tell you what they
want. The customers’
opinion is paramount. They do
not care about better-built software.
Partnering with industry leaders such as IBM and Dell lends
credibility and momentum behind the open source model.
Securing backing from venture capitalists (VCs) that invest in
companies with open source strategy and real value increases their
prestige.
Currently,
Red Hat simultaneously balances two opposing concepts where the more it
gives away its software, the more profit it makes.
It incurs the cost of technology development and still earns
revenues that keep investors happy. Its
primary contribution to open source is all the software it develops. In
the future, Red Hat may pursue more vertical applications in the consumer
environment and then consider proprietary venues.
In the final analysis, money is not the primary
reason for working. Delivering
value to customers and feeling good about it is why we get up everyday.
It is a matter of working to make the world a better place.
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