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While it is true that an open source business may not make money
directly from its products, it is untrue that open source companies do
not generate stable and scalable revenue streams. In actuality, in the
21st century web technology market, it is the open source company that
has the greatest long-term strategic advantage. This is demonstrated
by companies such as LINUX, Apache, and Netscape, a host of
web-specific technologies such as Java, Perl, TCL, and a host of
web-specific technology companies such as Sendmail. The open source
business model relies on shifting the commercial value away from the
actual products and generating revenue from the 'Product Halo,' or
ancillary services like systems integration, support, tutorials and
documentation.
This focus on the product halo is rooted in the firm understanding
that in the real world, the value of software lies in the value-added
services of the product halo and not in the product or any
intellectual property that the product represents. In actuality, the
value of software products approaches zero in the fast-paced, highly
customized, ever-changing world of information technology. But it is
not simply an acknowledgement of the revenue streams generated by the
product halo that makes open source a compelling business strategy.
Open source also cuts down on essential research and development costs
while at the same time speeding up delivery of new products.
This paradoxical situation arises from the fact that within an open
source project, the community members themselves provide free research
and development by contributing new solutions, features, and ideas
back to the community as a whole. The company that sits at the center
of any successful open source project may reap the rewards of the work
of thousands of highly skilled developers without paying them a cent.
A final strength of the open source business model lies in its ability
to market itself. Because open source products are typically released
for free, open source companies that can produce quality products and
generate a good reputation can almost immediately grab huge shares of
any market based on the complex and far-reaching global referral
networks generated by users.
In fact, in the web technology space, almost every global standard has
been based upon open source technology. By using the open source
technology model, we can create a superior product, which immediately
has a competitive advantage, and which generates multiple scalable
revenue streams while being freely available throughout the community