SaaS - The Right Business Model for Open Source?
Matching Genes and Some Inter-Dependencies Make a True Family: SaaS Providers and OSS Makers
Apr. 1, 2008 04:00 PM
“You never change things by fighting the
existing reality. To change something, build a new model that makes the
existing model obsolete.”
What does Software as a Service (SaaS) have to
do with open source? Not much, you might think.
SaaS, as you probably know, is a delivery- and
business-model for software that has been proving quite disruptive to the
traditional software business - just as the Open Source model has been. The
two combined may turn out to be even more so.
Internet Companies, Hosters, Telcos, Carriers,
Service Data Centers and others, have been making money for more than a decade
by providing services based on Open Source software. Unfortunately for the
makers of such software - Linux, Apache, PHP, MySQL, Postfix, Sendmail – just
to name a few - it didn’t help them to generate much revenues (sometimes, as
with MySQL a lot of value, though).
How then could SaaS help OSS makers? Because
the folks that provide SaaS and the OSS makers have the same genes.
Let me explain.
Today we talk about SaaS as a relatively new
thing. It's not. And not because it's the successor to Application Service
Providing (ASP), but because Hosters, Telcos, Internet companies and others
have been providing SaaS for at least 10 years.
Who provides your private email account, the
web site of your baseball team, your school, your company? You are most likely
getting it from one of these Internet Service Providers for free, with ads or
for a little fee. Dirt cheap in any case. This leads to tens of millions of
websites and some 1.5 billion hosted email accounts. There are two reasons for
that: the underlying software has been built to scale and to support
multi-tenant environments from the ground up, and it's almost all Open Source
Open Source Software that is free as in
freedom and free as in free beer. This limits commercial exploitation of the
software. So far the main business model for OSS makers was selling maintenance,
services and certifications with it. Only a few really make money with this
business model; Red Hat and Novell, maybe.
These limitations from the main underlying OSS
license, the GPL (2,3, Affero), basically prohibit commercial exploitation by
the traditional means for the maker of the software, selling licenses. But OSS
does not prevent you from coming up with cool services that everybody wants -- and
to make money from it if you build them with OSS. OSS allows for gigantic
infrastructures that were unheard of before -- or for very low prices for
devices. Famous Open Source exploiters are Google, Yahoo, all Hosters like
1&1, GoDaddy, Network Solutions. But also Apple with its OS X, or Hardware
makers like Linksys, TomTom and Tivo.