4 ms·

The main business proposition of open source is that you can create a larger market. This is hinted at in the article by saying "easy distribution", but it isn'

The main business proposition of open source is that you can create a larger market. This is hinted at in the article by saying "easy distribution", but it isn't really discussed. The goal of open source is to create a market for the product that is 10x or 100x bigger than a proprietary product would have. You won't ever capture 100% of the market. But if you capture a fraction of that larger market you still come out far ahead of the proprietary product in which you capture close to 100% of the market. Probably there are some products for which the market is finite or open source won't make it bigger, and for those the scarcity based viewpoint of this article makes sense. It is also worth noting that Red Hat has shown that open source doesn't require distributing your product for free. Another note is that many companies today take an open core approach to try to gain some of the advantages of open source without all of the downsides.

alfonsodev 6y ago
This is a good point, any examples that come to mind to illustrate it? I’m genuinely interested.
- deleted 6y ago
  [deleted]
- gregwebs 6y ago
  Many successful databases are open source. MongoDB (at least before the recent license change!) is a good example of a huge company where I doubt anyone would have made a noticeable business out of a proprietary version of the product.
  - Closi 6y ago
    I actually think MongoDB highlights the challenges in this article. Namely: - Tremendously popular database, a huge success by open source standards! - Their open-source API has been used by Amazon to create their biggest competitor (DocumentDB). Or alternatively any cloud provider will help you spin up pre-built images with MongoDB installed (no path to monetisation). - Have not (yet) been able to turn it into a profitable business, with large (and widening) losses recorded the last 3 years (at what appears to be the height of it's popularity). - To create revenue they need a huge sales team (I've heard the pitch and seen the cost!). They not only have to bid against competing technologies, but also their own free tier! - This resulting in... Mongo having to change their licence to create a profitable business. 23.15B market cap though - but they have had to ultimately change their licensing plan to find a profitable way forwards.
Closi 6y ago
> The goal of open source is to create a market for the product that is 10x or 100x bigger than a proprietary product would have. You won't ever capture 100% of the market. But if you capture a fraction of that larger market you still come out far ahead of the proprietary product in which you capture close to 100% of the market. The point of the post is that even if you capture a huge portion of the market, monetising it is very difficult, and profitability potential is the main reason you invest. While open source databases struggle to be profitable, MS SQL Server and Oracle are both very profitable. Why? Strong product-market fit - these products are heavily targeted at enterprise who are willing to pay money, and there is no 'free roll your own' solution to avoid paying the licence fees.

alfonsodev 6y ago

This is a good point, any examples that come to mind to illustrate it? I’m genuinely interested.

deleted 6y ago
[deleted]
gregwebs 6y ago
Many successful databases are open source. MongoDB (at least before the recent license change!) is a good example of a huge company where I doubt anyone would have made a noticeable business out of a proprietary version of the product.
- Closi 6y ago
  I actually think MongoDB highlights the challenges in this article. Namely: - Tremendously popular database, a huge success by open source standards! - Their open-source API has been used by Amazon to create their biggest competitor (DocumentDB). Or alternatively any cloud provider will help you spin up pre-built images with MongoDB installed (no path to monetisation). - Have not (yet) been able to turn it into a profitable business, with large (and widening) losses recorded the last 3 years (at what appears to be the height of it's popularity). - To create revenue they need a huge sales team (I've heard the pitch and seen the cost!). They not only have to bid against competing technologies, but also their own free tier! - This resulting in... Mongo having to change their licence to create a profitable business. 23.15B market cap though - but they have had to ultimately change their licensing plan to find a profitable way forwards.

Closi 6y ago

> The goal of open source is to create a market for the product that is 10x or 100x bigger than a proprietary product would have. You won't ever capture 100% of the market. But if you capture a fraction of that larger market you still come out far ahead of the proprietary product in which you capture close to 100% of the market. The point of the post is that even if you capture a huge portion of the market, monetising it is very difficult, and profitability potential is the main reason you invest. While open source databases struggle to be profitable, MS SQL Server and Oracle are both very profitable. Why? Strong product-market fit - these products are heavily targeted at enterprise who are willing to pay money, and there is no 'free roll your own' solution to avoid paying the licence fees.