Subject: Re: appliance-based business models
From: Brian Behlendorf <brian@collab.net>
Date: Mon, 24 Oct 2005 15:12:32 -0700 (PDT)

On Mon, 24 Oct 2005, Joe Corneli wrote:
> It seems odd to make a service contract that is completely voided upon
> tweaking, since presumably such tweakability would be one of the
> selling points for using your service in the first place;

No, actually, I'd have to entirely agree with that premise, unless the 
service contract can revert to a time-and-materials schedule as the vendor 
sees fit.  Other types of service contracts - such as "pay me $100 per 
system per month and I'll be available to answer any question you have and 
deal with any defect" - are essentially insurance policies that require a 
pretty tight handle on variables in order to sell and deliver profitably. 
Those variables could include anything from the underlying operating 
system and required packages, to configuration settings for the 
application itself.  The appeal of the appliance model, like the appeal of 
the ASP model, is that the vendor has a chance to lock down many of these 
variables by removing the ability for the customer to change them.  It 
doesn't matter to 99% of the population what version of Linux is running 
in their Linksys wifi base station; and that 1% that wants to run the open 
source firmware alternatives knows they can't call Linksys when they have 
problems.

Another appeal to the appliance model is that you're charging for the 
value you're providing to the customer - not for a markup on your costs of 
doing business.  The post that started this thread was all about the 
importance of realizing that.  If you only charge for support - what 
happens when you deliver software that is (or becomes over time) 
defect-free?

 	Brian