At On2, we open-sourced Theora (initally called VP3) partly because I (the CTO at the time) worried that if the company failed, all our IP would be locked up fo

At On2, we open-sourced Theora (initally called VP3) partly because I (the CTO at the time) worried that if the company failed, all our IP would be locked up forever due to complex legal obligations to investors and customers. The other reason we did it -- the reason that convinced the CEO and board -- was that we figured as we developed better products (VP4, VP6 etc) it would be preferable for us business-wise if the N-1 product was free to everyone. Otherwise, inferior competitors would continue to profit by undercutting us on price. It's impossible to undercut free. I guess I answered the opposite question -- why do companies EVER open source their old products? The culture of VC-backed and public companies is not especially conducive to making the decision to do so, even with old products. One argument you will hear against doing so is simple: old, free products might compete with new, profitable ones. There is no real business incentive to take that risk.