I've written in the past on Open Core strategies for Open Source technology-based businesses. I've been following this debate for quite some time, and have at least a little bit more to say about it.
Open Core has gotten a bit of a bad name recently, largely due to two major recent events:
- SugarCRM's new version and licensing going so far beyond any other established Open Source technology-based company that I hesitate to even group them into that category;
- Eucalyptus' rumor of a refusal to merge NASA-provided patches to their Open Source licensed core, by a community perception that it would make the Open Source core more competitive with the proprietary version, leading to the creation of the OpenStack initiative.
People who want a lot more backstory on the arguments in the blogosphere should turn to the 451 CAOS Theory writeups (from Matt Aslett - Post The First, and Post The Second).
Personally, I believe that Open Core business strategies can work quite effectively where there are at least two conditions that hold true:
- The core version is useful to a large subset of the target audience, without any requirement to purchase any features or services to achieve its utility; and
- There is a natural split between features/components/modules that are licensed under the Open Source core, and the proprietary extensions.
The key thing to me is that the split has to be natural. An artificial split happens when someone looks at a distinction between an Open Source part of the overall offering and a proprietary part, and can't figure out what rationale might have been used to determine which was which, except for revenue defensibility. If your user base can't look at a feature and instinctively tell you whether it belongs in the Open Source version or the proprietary version it's artificial.
OpenGamma, the company I founded which is building an Open Source Platform for financial analytics and risk management, has from its inception planned on an Open Core strategy for part of its business model. Based on all the controversy, I've clarified our position, and how we naturally divide up features, in a new blog post on our web site. That's the official company statement.
This post is to explain my personal beliefs, and how we divided up the world. Just to make it abundantly clear, let me spell it out: I will not reject a community-generated patch just to maintain the defensibility of our revenue model.
Comments and questions more than welcome, either on the OpenGamma specific story (on the OpenGamma post) or my personal take (on this one).
Update 2010-07-26
Just to be clear, people should be aware of the changes made above about Eucalyptus: they never actually rejected contributions, but there was a rumor of it leading to massive perceptional issues that flowed through into debates about Open Core, regardless of the truth of these allegations. Thanks to some very wise birds who clarified to me back-channel, leading me to make sure that this is very very clear here.
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