Impossible to compete with free software

One place where it's very easy to compete OSS is in the enterprise. For an enterprise, the license cost of software is only part of the total cost, which includes:<p>* Piloting, operationalizing, and deploying the code.<p>* Staffing maintenance and support.<p>* Training.<p>* Tracking and deploying new revisions of the code.<p>In fact, I think a lot of people have had the same experience I have, which is that it can be easier to sell software to an enterprise than to give it away.<p>The flip side of this is that for business/enterprise software, there is very little risk in just making your code open source and then selling a commercial version. Prospects will download and play with your code. They'll pre-qualify themselves, calling you only when they're receptive to the software's value prop. The people who will operationalize the free version probably weren't good prospects to begin with.

I would actually say it's not that hard to compete with free software. Here are a few reasons:<p>- Open source is free (as in beer). This means that there's no support, no training and noone to blame if things go wrong. As anyone who has worked at a semi-large business will attest that is bad from a corporate buying perspective.<p>- The UI design of open-source software is often terrible. Open-source values code, not pretty design. I've never heard of an open-source solution that has gone through formal usability tests. Often customers don't care about pretty code, they care about a pretty UI.<p>- There's noone to turn to with feature requests, etc. And no, for most companies submitting a request to sourceforge or just coding it up yourself is not an option.<p>- There's no marketing for open-source software. Marketing sells producs, otherwise companies wouldn't spend trillions a year on it.<p>- You have no guarantee that your open-source software will be updated in the future. It might just be abandoned. And again, for most companies just doing it yourself is not an option.<p>In summary, using open-source software requires you to know what you are doing, being able to overcome installing and maintenance hurdles without support and living with the knowledge that the software might not be updated. And you'll have to actively go out looking for it, because noone will try to sell it to you.<p>Most business-types, who are the ones with money to spend, don't even know that there is such a thing as open-source software, and if they did many of them wouldn't use it for the reasons stated above.

There are some good comments there.<p>I think that Free Software, in all forms, has helped raise the bar for paid software. I remember paying for some really simple and crappy stuff (commercial software) back in the 80's and early 90's. A lot of it was stuff that has a comparable free counterpart today.<p>I do not believe that any legitimate valuable software product has lost a significant piece of their marketshare to free software. The free options HAVE required that the paid software have a true value though.

We do both. Our company builds 90+% Open Source software, and a small chunk of proprietary code that sits on top.<p>Our Open Source products have millions of users.<p>Our proprietary software has thousands of users (well, actually one thousand and some hundreds...I don't think we've crossed the 2000 licenses sold mark, yet, but it's getting really close).<p>So, in one sense (raw numbers), we can't compete with Open Source. Even with our own software. But, when I look at the percentage of paying customers we have that we wouldn't have without the Open Source products, the math begins to look less depressing. Maybe we just have a really high marketing budget made up of lots of development hours spread over the past 11 years...and over time we'll convert more and more of those Open Source users into paying customers.<p>That said, it's definitely possible to convince people to pay for software. Just make it better, easier, better supported, and more predictable over time (make upgrades that work, for example; almost nobody gets upgrades right, including most Open Source software...so if you do, people will remember it and won't be nearly as tempted to try a new product every time a major upgrade or new system is needed).<p>Also, it matters who you target. We have some Open Source users who want our commercial products to be even cheaper, insisting that we would sell <i>huge</i> numbers if it just cost half as much. But, I know the reality is that the difference between free and $69 is almost as big as the difference between free and $138, in terms of how many people will make the leap. So, targeting the low end of the market for a product that has Open Source competition is insane. Target the high end, luxury end, or enterprise end. Power users, Apple users, professionals who make a lot of money by using your software, etc. We actually decide what goes into our Open Source vs. our proprietary product based on whether it helps someone make money. That's pretty much our only determining factor: Does it make money for the customer? If yes, it's proprietary software. If no, and there are lots of cool non-commercial uses for the feature, then it goes into the GPL version. That won't work for everyone...but it works for us, since our market is one that has a pretty clear divide in who uses the software and for what.

I hate the word "free", it always makes people think of free beer.<p>You <i>can</i> charge $$$ for Free Software and "open source" software.<p>One day I'm going to get pissed off enough to start selling the GIMP for $100 or something, just to prove this point. Maybe no one will buy it, but you <i>can</i> do it. And hey, maybe it'll encourage people to "pirate" it and increase the number of users?

I'm oriented around the "enterprise". The mainstream free software I work with tends to be powerful but difficult to learn to use effectively.<p>As far as I can tell it's reasonably difficult to find people who are able to work through simple network connectivity problems without paying a lot of money.<p>Here's a two minute business model for someone who aspires to start a mISV:<p>1. Learn how to methodically diagnose connectivity problems between points on tcp/ip networks.<p>2. Identify a niche with money that relies on connectivity.<p>3. Write some software for people in the space (or find some free stuff that does it that other people don't have time to learn how to learn)<p>4. Become known as a person who uses such software to solve problems.<p>5. Profit!

I think its important <i>not</i> to think of free software as mutually exclusive with paid software.<p>It's been proven that you can create a profitable business by creating open-source/free software and building a business on top of that. Same goes for SaaS apps that have free plans.<p>Take a look at the article on Zimbra that was just posted. 40 million paid email boxes. Yet, there is an open-source version of Zimbra's software suite. Similar things going on for places like RedHat, MySQL, Google Apps, SugarCRM, etc.<p>You can create an open-source app and reap the benefits of it ... and still make money by:<p>- selling premium versions<p>- selling support<p>- selling hosting with per-seat licensing<p>- selling add-ons and custom development services

Free software is a common bogeyman on the Business of Software forum. It's a handy scapegoat for when your new µISV experiences disappointing sales.<p>You'll note that the guy who asked the question was trying to find an excuse not to <i>start</i> a business, and how quickly cooler (and more experienced) heads prevail.

<a href="http://www.valt.helsinki.fi/staff/herkia/kava/Seminnarit/MI_mustonen.pdf" rel="nofollow">http://www.valt.helsinki.fi/staff/herkia/kava/Seminnarit/MI_...</a><p>That paper has a (simplified) model for the economics of free and proprietary software in the same marketplace. It basically shows that the best programmers have incentives to work on free software. It also shows that the price that the proprietary software maker places on the product directly affects the number of programmers working on the free alternative. Very cool paper that I reviewed for an economics course.

The market is changing from: create something and try to sell it, to: get paid to create something. This has always been the case for programmers that work for a product company. They agree to a price(their salary) before implementing the software. Of course, this is nothing new, consulting practices have always operated this way. The ony way open source hurts devs is that open source encourages reuse. Devs are paid over and over again to create the same thing. This is a much more efficient(in terms of effort) way to do things. Companies will always need new features and custom integrations. Obviously this does hurt "product comapnies", but do we really care? If we don't need something anymore, let's throw it away. It's wasteful not to.

But for any software used by a business it seems pretty simple. You simply need to match the free software in features (or get pretty close) and compete on support.<p>The key question is "What if something goes wrong?"<p>Because a business owner can’t really use open source stuff unless they (a) know enough to edit the source competently or (b) can afford to hire someone who does. Assuming there’s a large market of founders who can’t edit source code themselves and don’t want to pay $100+ an hour to have someone else do it you end up with a pretty wide open market.<p>Corporate America will always be risk adverse which means the deck will always be stacked against free stuff. The trick to competing is just stoking the fires of that fear and then making your software look like the remedy to all of them.

If you look at all examples in this thread all the software they refer to is GUI based non-technical applications.<p>I think this highlights where Open Source competes the most, applications which the engineers build for themselves. Apache, for example, makes building a paid for web server pretty uneconomic (IIS is bundled).<p>When engineers doing Open Source are scratching their itch they tend to make world beating products, when they aren't scratching their own itch the momentum tails off because there isn't another driver (such as a wage, or a product manager).

If there is a lot of good free software to compete with you, it might be that you're trying to sell what is considered commodity. Usually the mature open source software projects are usually infrastructure ones. Unless you've come up with something to reinvent that product, it might be more prudent to build on top of open source software, and use it to your advantage instead.

FOSS lowers your revenue if you want it to or not, but if you play ball it can lower your costs so that you can make the same profit anyway. Aim for B2B sales of complex software over consumer - especially now - and the open source part won't actually cost sales while allowing students and hobbyists to learn your system for free.

Take the fact that many people who buy software can't use it without help...free software will never out compete "paid" software, where help is a major portion of the product.

Why did this get posted here?<p>It's a dude who thinks he wants to start a business, but he's saying "You can't do this." Is it a question, or is it an opinion?<p>And anyway, we all know, of course you can compete with free. Look at Microsoft. Look at Apple. Look at Adobe. Look at all the indie Mac devs and small shops. There are free alternatives to every one of their major products.