This is a good question, because it seems like a bit of a contradiction: these companies are there to make money and they’re spending money to develop these products but they’re still “giving” their code away for “free”.

Obviously I don’t know exactly what the thought process is by the executives of these companies, but I can take a guess. My guess is that open-source is great if you want to:

• Lower costs: get others in the open-source community to work for free in testing and spotting bugs in your software.
• Lower risk: this goes along with lowering costs i.e. lowering the costs lowers you investment risk. Furthermore, getting feedback from the open-source community is a lot quicker than having to wait for the software to be released and only thereafter get feedback from your users, by which time they might have created a negative impression with the end-users (if the software is full of bugs).
• Increase adoption rate: most of the products being open-sourced are SDKs and other development tools. This is very beneficial to developers using those development tools i.e. because it gives the developers more freedom and control. In the long term they end up with more developers/users hooked on their platforms at a quicker rate. As an example, I’m guessing it’s one of the reasons Microsoft opted to finally open-source .NET because it would get a lot more developers hooked on their platform, programming languages and development tools, which ultimately results in more apps being developed using Microsoft technology. Once they’ve increased the number of apps on the market developed using .NET, I’m pretty sure Microsoft have plans to capitalise on that in one way or another.

If you’re a developer and have no intentions of every getting paid for writing code, then deciding between open-sourcing your software or not can be a simple decision. However, if you have any intentions to get compensated for your work, then the decision to open-source or not can be a complicated and long winded debate which has gone on for decades. On the one side you have the capitalists/conservatives that sell software for a price and their pricing models are relatively simple to understand especially in commercial and non-enterprize environments i.e. you get this product for this price. On the other hand, you have the open-source socialists/liberals/anarchists, advocating for making software “open”, transparent and most of the time offering it for free. However, for anybody that has ever delved into the open-source debate, they will quickly realise that open-source is in fact not that clear and transparent after all.

It’s all good and well to spew out socialist rhetoric about how we should all be more altruistic by volunteering our time and skills to open and transparent software communities, but once we’ve all had our turn at singing kumba-ya, the truth is that in reality there’s no such thing as free lunch. Meaning that although many open-source enthusiasts pitch the idea of so called free software, the users will still end up paying for it one way or another, be it in some sort of fee, time, energy and/or frustration. The reason being that in the real world, time equals money and money makes the world go round. Therefore, any developer working on a “free” and open-source project still needs to pay the bills, put food on the table and at the very least still have money left over to buy a laptop on which to work on. So how do open-source developers get compensated? Open-source projects typically start off as side-line hobby projects, then perhaps moving on to offering paid for versions and/or charging for services.

Over the years I’ve thought about this debate countless number of times and like most analytical people I’ve searched far and wide for an absolute answer i.e. is open-source good or bad. When I was younger I leaned more towards the open-source point of view and their anarchist/hippie rhetoric about how corporations are evil, money-grubbing establishments designed to create monopolies and control people’s lives. Now that I’ve gotten older, my view has become a bit more conservative. Maybe it’s got something to do with there being a grain of truth in Winston Churchill’s wise words where he said that “any man who is under 30, and is not a liberal, has no heart; and any man who is over 30, and is not a conservative, has no brains.”

So here’s my attempt at an absolute answer as to when to open-source and when not to:

• How most open-source projects start off: as the saying goes, “necessity is the mother of all inventions”. By that token, most open-source projects start out from a need/problem that someone has. A developer may want to achieve something that they cannot do with commercial software that is available or they just don’t have the money to purchase commercial software that can perform the given task. While developing this new app for their own needs, it suddenly dawns on the developer that other people may have the same need/problem that their new app can solve. At this point the developer begins to think about how they could possibly get others to use this new app and possibly capitalise on it. After careful consideration they realise that there’s more to selling software than simply putting a price tag on it i.e. a company needs to be setup, marketing needs to be done, payments need to be captured, orders and invoices need to be created, taxes need to be paid and amongst many other things, all sorts of people need to be hired e.g. marketing, sales, finance, support etc. Starting and managing a company requires a lot of work and responsibility. Due to the fact that a descent amount of capital is required, it also involves a huge amount of risk i.e. it’s not always easy to predict whether or not a software product will be a hit or not. So as opposed to going through that whole nightmare, our friendly developer decides to rather just upload his code to a popular open-source repository that all his friends can access. If nothing else, it will look good on their resume.
• If the software is a hit: if there proves to be a substantial demand for the software, the developer may begin thinking about capitalising on it. At this point the developer will probably be stuck between a rock and a hard place. If he closes down the open-source repository and begins to charge for the software he’s fear is that the users will just continue using the latest open-source version available and never purchase any new versions. Even if there are some people willing to pay for the software, the problem is that the developer will never be able to sell it to enterprise customers because no large company will agree to adopting a product that is being supported by a single individual i.e. it would just be too risky for the company. So it’s a bit of a chicken and egg scenario i.e. you need to generate revenue to hire more people, but customers are hesitant to commit to a one man show. On the other hand if he keeps the open-source repository available, then there is no way to make money on it. To get out of this dilemma, most developers in this situation either begin selling services or offering paid for upgraded versions with additional features.
• Charging for services approach: most open-source developers will write the code for free to develop the software, but if users need any help with specific feature requests, installations, advice or any consulting services, they will be charged an hourly rate or are sold a 1/3 year Service Level Agreement. As a bit of a realist, it is at this point that I start questioning the incentives put in place for this type of revenue stream. I ask myself, what incentives do open-source developers have to produce quality software that is easy install and use when their primary revenue stream comes from selling services? If charging for services is your only revenue stream on an open-source project, then there is a clear conflict of interest in this approach and I would advise against it. Reason being that what users want is software that is easy to install, configure and use, while at the same time the developers are well aware that the easier the software is to configure and use, the less services they will sell. So what you end up with, is open-source software that is counterintuitive and users are constantly left with more questions than answers. In this kind game with these kind of incentives in place, there is not much that is open and transparent to the users i.e. the software and code is available and free for anybody to use, but nobody knows how to set it up and us it. You may be of the opinion that it doesn’t matter whether there’s a conflict of interest or not, as long as you’re making some money off of your efforts. However, my argument would be that users are not stupid, they always know when there is a conflict of interest and sooner or later they will start posing questions. This approach also creates confusion that results in users asking why you’re doing some work for free while charging for other work. This is where open-source can lack transparency. With the above said, there are some more negative side effects with this approach:
  • Minimal documentation: the whole point of writing documentation is to make it easier for users to understand the process of installing, configuring and using a given piece of software. Given the fact that many open-source software is offered for free, the developers have almost no incentives to write comprehensive documentation i.e. the more difficult it is for a user to get up and running and troubleshoot issues themselves, the more services the developers can sell. What you naturally end up with is open-source software that often has little to no documentation aside from a simple two page quick start guide. The counter argument from open-source developers is that “the code is the documentation, just look at the code”. But if we cross over from the delusional hippie world into the real world, we realise that most users are not coders and therefore having the code adds zero value to their lives. Even as a coder myself, if I’m interested in using someone else’s software I will neither have the time nor the interest in doing support on other people’s products. Personally I just want to be able to click install, use the software and move on with my life because I have enough of my own code to deal with, without having to deal with other people’s broken code.
  • Lower quality of open-source software: in terms of quality, the argument made by open-source purists is that their software is of much higher quality than that of proprietary software. According to them this is due to the fact that open-source communities are larger and there are more people testing, spotting bugs and fixing them as opposed to small teams that develop proprietary software. This is based in Linus Torvalds’ law that “given enough eyeballs, all bugs are shallow”. That does indeed sound plausible, but on the other hand it seems to me like a bit of a contradiction to the many open-source companies that rely on services as their primary revenue stream. If the quality of open-source software is so incredibly high, then how do they make their money on services i.e. if there are no bugs to fix, the apps are easy to use and everything just works, then what kind of services are these developers selling to pay the bills? Developers creating proprietary software on the other hand have every incentive to write high quality code and create intuitive user interfaces, because if they don’t, then nobody will buy their software.
• Paid for upgraded versions approach: an alternative to only offering services is to develop additional features into the open-source software and offer those features at a premium i.e. offering a “free” open-source community version as well as a paid for version with additional features that are enticing enough that make users want to spend money. Open-source can be fantastic when you want to lower your risk while at the same time increase the user adoption rate of your software. By open-sourcing your software you can start a project without having to take on the risk of starting a company, investing capital etc. and if there proves to be a high enough demand for your software, you can then take it to the next level by offering additional features and charging for them. This is the only time I would see open-source as good idea i.e. assuming that you actually want be compensated for your work.

In summary, before open-sourcing your software you should consider the number of features that you have in mind and whether or not there will ultimately be a demand for those features on the market. There are many apps that can be incredibly useful, but beyond their basic features there are a limited number of additional features that can be developed and incorporated into future paid for versions. A great example would an SDK (Software Development Kit) to interface with third party application or hardware: there are only so many features you can add to such an SDK. This kind of software with limited useful features should either be open-sourced without any intention of ever making money or it should never be open-sourced, but rather be released and sold as proprietary software right from the start.