Subject: Re: Nessus 3.0's failed community
From: Ian Lance Taylor <ian@airs.com>
Date: 30 Nov 2005 11:23:03 -0800

Federico Lucifredi <flucifredi@acm.org> writes:

> it looks like, even when you have a large market, the margins you make
> *per customer* are considerably lower than a proprietary vendor make,
> and with the added burden to have to support so many more customers with
> lower per-customer revenues to show for it. 

It seems to me that a free software vendor can make the same margin
per customer as a proprietary software vendor.  The difference is that
there may be many other people, not customers, using the free
software, but there will be very few other people using the
proprietary software.

Free software vendors should not and do not support people who are not
customers.  It's essential to make those other users into a strength
rather than a weakness.  They can be a strength in a number of ways,
for example: 1) finding bugs; 2) fixing bugs, or at least helping to
pin them down and test fixes; 3) increasing mind share; 4) spreading
basic infrastructure which can be used to sell value-added services;
5) taking revenue away from proprietary competitors.

I agree with other comments that you are very unlikely to get serious
development effort from outside the company.  Of course, it is
possible to build a real company around an existing free software
project, which is essentially what Red Hat did.  In that specific
case, you can get a lot of development from outside the company, as
Red Hat does.

> Perhaps there are more savings to be capitalized on -- but even so, from
> a business point of view the objective is to turn a profit, and selling
> "updates" as Red Hat Network does is not enough to create one (or more)
> billion-plus cap publicly traded company, which would be the measure of
> a *software* FSB's "big" success... and so far I don't see it happening.

How many billion-plus cap pure software companies are there?  I expect
that even those companies make the majority of money selling services,
except for Microsoft which is an outlier unlikely to ever be repeated.

> Of course, services are another story entirely -- and while wearing my
> businessman hat I wonder how much will the GPL 3 make a dent in those
> models... I cannot shake the feeling that there is something
> "cannibalistic" about Free/Open Software models when taken in relation
> to businesses - and I don't mean that the way MS does, I mean in a sense
> of *inherently* limiting a company's final size -- which exposes them to
> the "small fish" set of problems.

Capitalism is cannibalistic--that's the innovator's dilemma.  There
are many more small companies than there are big companies.  Big
companies normally do many different things to earn money; even GM
sells services.  I don't see any reason in principle that free
software limits a company's size.

Ian