* The Business of Software

A former community discussing the business of software, from the smallest shareware operation to Microsoft. A part of Joel on Software.

We're closed, folks!


» Business of Software FAQ
» The Business of Software Conference (held every fall, usually in Boston)
» Forum guidelines (Please read before posting!)


Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

Nicholas Hebb
BreezeTree Software

Bob Walsh
host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

Competing with open source -- 'Community Edition'?

Our main product is a component library that is in direct competition with open source components.  Now, we got into this market with our eyes open -- we struggled trying to use the open source solutions that had been out there, and frankly, they are all pretty poor both in design and implementation.  Our offering is feature-complete, *very* easy to use (perfect for those learned-VB-in-7-days-level corporate programmers), and is fully in compliance with a key file specification that forms the basis of the vertical we're playing in.

Now, we sell into two key markets.  One is the internal, corporate app development market, and one is a market that is built around a very popular open source web-based content management system that our product just happens to integrate very nicely with (another feature that our solution has to its credit that the open-source components don't).

Since we came to market, I've had a sneaking suspicion that we should have two editions; one 'Community Edition' that just has the fundamental chunks of functionality, and one 'Enterprise Edition' that has everything.  The Community Edition would then act as the evaluation version for the Enterprise Version (whose current eval version has a document-count limitation that I think might be preventing potentially-paying users from getting a full taste of the product's capabilities).

I think this would kill two birds with one stone.  Our library would get into much wider distribution and use; that generates greater word-of-mouth, buzz, and ultimately an increase in lead generation.  Secondly, it would resolve the niggling issues with our existing evaluation version potentially not providing enough functionality to give truly interested parties a proper taste of the library.

The downside here is if we draw the line between the Community and Enterprise Editions in the wrong place -- too far one way, people won't really use the Community edition, too far the other way, too few will need the extras in the Enterprise Edition.  Of course, where to draw that line is something we need to figure out, but I wanted to mention it as a risk nonetheless.

Thoughts?  Any other comments / suggestions from others that play in markets also serviced by open source projects?
Cowards don't tell
Wednesday, September 15, 2004
If you are in the component market, then I wouldn't worry about the Open Source market being much of a competitor.  The fact is that you are offering a complete package that comes with your company name and support.  Those who use open source components are those who know how to get around in the open source community already.  The fact is that if there is already someone who has tried and implemented the open source competitor and they like it, they aren't probably going to use yours even if you were giving it away for free.

I know that I would be VERY cautious about using an open source component of any kind in our products if there is an established ISV out there that stands behind the product and sells it for a reasonable price.

Here is the problem with the free or open source component: I download (and maybe even compile) the open source compoent.  I manage to get it working (even though there is probably little to no docs).  Now I come back to the product a few months later and see that there were some fixes made but they broke an interface that I was using in the version versions back.  Who do I bitch to?  Nobody.

Our company also "competes" with free and open source products.  In the end a software developer who wants the product we sell will go with us because they need a proven product with top-notch support.  They need to know we are answerable to them for problems or bugs in the product.  The guy who is making a freeware app will go with the free product, the person who is using your product as a capital resource will be happy to pay.
Wednesday, September 15, 2004
I wrote an article for my web site entitled "Fifteen Days" which actually addressed this question.  You can access it by clicking on my name at the end of this post.

A very good way is to solve one obvious, direct and common problem with your Community Edition.  Then, solve that problem and a second obvious, direct, common and related problem with your paid edition.  The trick is to construct your Community Edition such that the customer can infer that a solution to related problems exists.

I've use the example of anti-virus software.  Many people use the free version to identify (A) if they have a virus and (B) what virus it is.  But, once a person has a virus, it is easy to infer that there exists software to (C) remove the virus and (D) protect the system in the future.

And, sure, a lot of technical people will claim that they use free anti-virus software to identify the problem and then manually fix their system to avoid paying.  And, that's fine because these technical people weren't likely to pay you in any case.  Most products are bought by businesses, not by the personal cash of technically-skilled individuals.  You care about gross sales, not about preventing truly dedicated individuals from getting value from your free product.

You are losing some sales in exchange for promotion that you hope to boost your overall sales.

Don't be afraid to tune your product.  Put more into the Community Edition on some releases; cut back on other releases.  Try to measure.  Feel your way to find (and follow) that point where you get a lot of promotion with little cannibalization of your sales.
Daniel Howard Send private email
Wednesday, September 15, 2004
have you thought about maybe releasing your components under two licenses yourself? an opensource license and a commercial license.

That will let your company compete directly with the opensource versions out there for the developer help, quite possibly reducing the support for the competing products even further and yet still make the money you already are from your commercial customers.

just an idea :)  Ive never done it myself, but if I were creating component type software for other developers I would seriously consider it...all those expert eyes staring at my code could only be a good thing for my paying customers.
Wednesday, September 15, 2004
FullNameRequired: That *might* work if we were IBM, but since we're not, there's just about zero chance of that happening.  I have no faith in the tendancy of human nature to pay for something that can otherwise be had for free.  Ergo, you need to use either a carrot (additional features) or a club (FUD related to the customer's need for ongoing support) to get someone to open their wallet.  I think the latter is inherently dishonest, so I'd rather go for the former.  Trying to make money off of open source code requires the FUD approach last I looked (not that money can't be made off of closed-source code using FUD too...).
Cowards don't tell
Thursday, September 16, 2004
hey, you might be right.

I was assuming that you were creating components for developers to use within their own software?

If thats the case then offering your product under a dual license, GPL and commerical would *not* mean that they can use it for free, unless they are using it for no commercial benefit to themselves as I understand it.

*shrug* up to you, anyway :)
Thursday, September 16, 2004
I think the OP's problem with that is his distrust of human nature. He thinks that if he releases it under an open source license, people will just take it and use it commercially anyway, and to hell with him. He can't afford to prosecute, as he says, he's not IBM.

Personally, I think he's right, and I also agree with his sentiments on sales based on FUD about support.
Andrew Cherry Send private email
Thursday, September 16, 2004
"He can't afford to prosecute, as he says, he's not IBM"

ahh, ok somehow I missed that point, but its not a bad one.

hmm, actually I have an idea that the EFF(?) or some other organisation will sue for breached gpl'd licenses on behalf of the copyright holders.

not sure, does anyone else have an idea of the details?

but on the whole I agree, its probably not worth the hassle.

<g> I hope you are wrong about human nature though, IIRC .net allows the source to be viewed outright and I have a client looking at that as an option now.
Thursday, September 16, 2004
The problem with the EFF solution is that if you released a version under the GPL, you wouldn't be able to release it commercially as well. To do this you'd have to look at something more like the BSD license. However, I don't think that there's any advocacy group about to help you sue people when they breach that one.

As for human nature... Well, I hope i'm wrong, but it doesn't usually feel like it when it comes to people doing what they think they can get away with!

Not quite sure what you mean about .NET, i'm going to assume you're joking on that one ;)
Andrew Cherry Send private email
Thursday, September 16, 2004
<g> clearly Im not trying to convince the OP to go with this option now, Im just following up on a couple of points :)

"The problem with the EFF solution is that if you released a version under the GPL, you wouldn't be able to release it commercially as well. "

well, yes you can, surely?  its just a copyright license and I can license out my copyrighted material under as many difference licenses as I wish.

those who use the source under the GPL'd licenses have to abide by those terms, whereas if someone wants to use it for commercial purposes they can license it from me specifically for that purpose.

"Not quite sure what you mean about .NET, i'm going to assume you're joking on that one ;)"

no joke Im afraid :)  I prolly explained it wrong but from what I understand an application created using .net isn't compiled code as such and the source code is very easily viewable by anyone who wishes to do so and has a copy of the application.

one of the points Im looking into at the moment is whether some kind of obfuscator will be necessary if we go with .net, and if so how much good it will actually do...
Thursday, September 16, 2004
"The problem with the EFF solution is that if you released a version under the GPL, you wouldn't be able to release it commercially as well. "

(eek! a quote - quick, add threading or something... :)

Nope, you can definitely dual license. Look at our friends MySQL AB - been doing it for years.

I do it myself, but not at the product level - my commercial stuff uses libraries that are in stuff I have released under the GPL.

The way I see, the GPL is *excellent* protection for commercial code, as no competitor (with any sense) will dare to touch it.
Richard Rodger Send private email
Thursday, September 16, 2004
You're right, I wasn't thinking totally clearly there! Of course if you're the original copyright holder you could. My bad!

Although I imagine legally it could get quite complicated proving where things came from if there ever was a legal tussle...

Regarding the .NET thing, well, it is compiled, it's just compiled to MSIL. Although there are good decompilers available, that's still a long way from just being able to read the source!
Andrew Cherry Send private email
Thursday, September 16, 2004
"Although I imagine legally it could get quite complicated proving where things came from if there ever was a legal tussle..."

how so?

If Ive release code under the GPL, and bob, jack, tom and harry all download it, but then later on jack tries to claim ownership of a portion of it, Im in a *really* good position because bob, tom and harry can all provide proof that the original code came from me.
Thursday, September 16, 2004
Ownership is not the issue.

If you release through the GPL then someone can quite legitimately rename all the files and their dependencies and so long as they keep it within the GPL there is no remedy.

Other than maintaining original copyright messages which may be within the source there need be no mention of the original distribution.

The copyright still remains with the original owner of their material.

The distributor of the new renamed distribution can sell/implement for whatever they can get for it.

If you dual licence, in the sense that you have a commercial non-free licence and a GPL licence then it naturally follows that if someone improves your original you cannot make use of that within your commercial tree (unless you come to some arrangement).

Essentially this means that only the source is available, no official version with third party improvements would be made.  Any significant changes would necessarily fork the tree.

There are certain scenarios when the commercial owner could be locked out of their own product because they weren't able to make use of code depending upon their own code in other products.
Simon Lucy Send private email
Thursday, September 16, 2004
Ack, I knew this would turn into a "my license is better than yours" discussion.... ;-)

Anyway, until someone shows me how actually opening source can make more (or, say, any!) money for anyone (other than IBM/Sun/etc), I'll not wade into that cesspool, thanks.

To answer a question about the end use of our components -- it's actually used far more for internal applications, web-based "stuff", and assorted, otherwise non-productized uses.  That's why I'm particularly concerned about putting everything out there for free -- there's really no incentive for most of our potential customers to actually buy something, when even the (very weak) potential risk of legal troubles is present.
Cowards don't tell
Thursday, September 16, 2004

This topic is archived. No further replies will be accepted.

Other recent topics Other recent topics
Powered by FogBugz