Commercial Open Source: A Half-Baked Business ModelCommercial Open Source: A Half-Baked Business Model

PacketTrap CEO Steve Goodman struck a nerve with his prediction that commercial open source software companies are doomed to fail. The fact that his controversial position wasn't universally rejected is evidence that questions remain over the commercial open source model.Goodman's Feb. 12 blog post predicting the demise of commercial open source prompted a stinging rebuttal from CNET blogger Dave Rosenberg, who refers to Goodman's argument as a "misguided marketing attempt" and worse. Rosenberg, it should be noted, is CEO of MuleSource, a software startup behind the open source Mule enterprise service bus. As it happens, Goodman's blog post was published the same day that MuleSource announced an unlimited pricing model for business deployment. Goodman, in effect, rained on MuleSource's parade.

In response to those two blog posts and my own on the subject, readers weighed in on both sides. "Goodman is onto something," comments one, while another calls Goodman's argument "overstated." Goodman followed up with a second post, a rebuttal to Rosenberg's rebuttal.

The debate over the right model for commercial open source isn't new, isn't limited to these two points of view, and certainly won't be settled anytime soon. My colleague Charles Babcock has written extensively on the topic. Here's his quick take: "The drawback, if there is one, to commercial open source is its desire to maintain control over the project and ownership of the code. You can't be a key contributor and work outside the company. This will turn away talent, limit contributions, and repel some freewheeling code writers in some cases, but I fail to see how it crippled JBoss or MySQL. Far from it. A cohesive disciplined group that happens to be inside the same company can accomplish a lot."

I also heard from commercial open source company WaveMaker Software (formerly ActiveGrid). Having just returned from the Open Source Think Tank event, WaveMaker CEO Christopher Keene posted this piece titled "The Silverado Rules For Open Source Success." Keene leads with this point: "A panel of 10 CIOs declared that the patchwork quilt of licenses and business practices among open-source vendors is a major barrier to enterprise adoption of open source."

There's at least one other point worth mentioning here. In a conference call last month to recap VC investment in 2007, Deepak Kamra with Canaan Partners said that commercial open source companies were "struggling" with how to make money.

So, what does all of this add up to? Simply that the commercial open source market is still in flux. Open source developers, IT departments, and the new breed of software companies that work with one side to serve the other are still feeling their way through this. In addition to the business model question (i.e., how open source companies charge for their services and make money), there are unsettled issues around software licensing and intellectual property.

PacketTrap's Goodman is partly right -- some open source companies will fail because their commercial interests are out of whack with the open source community. Yet, others will surely succeed. Smart, motivated people will find a way to make it work.