tion open source (OSSg2)—also known as professional open source—firms are essentially a hybrid between corporate distribution and sponsored OSS.

As with the corporate-distribution model, OSSg2 companies typically generate the bulk of their revenues by providing complementary services around their products [ 3]. Like sponsored projects, OSSg2 firms provide the majority of the development resources required to create and maintain their products. However, unlike most corporate-distribution companies, OSSg2 firms generally do not sell licenses for their products, ² and unlike most sponsored projects, OSSg2 firms typically own or tightly control the software code and can exploit their intimate knowledge of the code to provide higher-quality service than could potential competing service providers. As the leading OSSg2 firms (including JBoss, ³ MySQL, Trolltech, and Sleepycat⁴) are privately held or have been acquired, we do not have data on their profitability. However, based on interviews with the CEOs of the four firms mentioned here, it appears they are cash-flow positive while growing rapidly.

We contend that OSSg2 firms have a very promising business model that could emerge as a dominant model for OSS development in the coming years. Here, we examine four leading OSSg2 companies, highlighting three important benefits of their business models.

to traditional software firms. To quote Marc Fleury, former CEO of JBoss: “We (OSSg2 companies) are proving that professional open source can do it better and faster and cheaper than our traditional competitors.” ⁵ How the OSSg2 model addresses three specific strategic risks is discussed later in this article.

OSSg2 Leaders. Trolltech was founded in Norway in 1994 and currently has more then 4,400 customers. It manages two software products: Qt, a cross-

Because different business

models are not equal in their capacity to

create value, we must analyze each particular

blend of customer, product, and

production and distribution mechanism.

 

EVALUATING THE OSSG2 BUSINESS MODEL We studied four companies that are among the OSSg2 leaders. In order of business longevity, these are Trolltech, MySQL, Sleepycat, and JBoss. Three important characteristics of the OSSg2 model exhibited by these firms that lead to specific benefits are: accountability (and the benefit of reduced liability problems); talent base (and the associated benefits for code quality and support); and ecosystem (and the associated benefits of trialability and quality assurance). These benefits should improve the value proposition to customers for OSSg2 products and are central to our contention that OSSg2 is a threat

²As discussed here, some OSSg2 firms offer a proprietary license for organizations not wishing to comply with the terms of the OSS licensing model. ³JBoss was acquired by RedHat, Inc. in April 2006. ⁴Sleepycat was acquired by Oracle, Inc. in February 2006.

platform application development library, and Qtopia, an application platform built for embedded Linux. A second OSSg2 leader, MySQL, was founded in Sweden in 1995. In mid-2007, MySQL’s OSS relational database had 11 million active installations. MySQL is an attractive alternative to higher-cost relational systems from commercial vendors. A third leader is Sleepycat Software, a U.S. company founded in 1996. Its flagship product, Berkeley DB, is an OSS-developer database that boasts over 200 million deployments. Finally, JBoss Inc., a U.S. company founded in 2001, provides middleware through its JEMS (JBoss Enterprise Middleware System) portfolio of products. Three of these products are currently market leaders: JBoss AS (a J2EE-compliant application server), Hibernate (an object-relational mapping solution), and Tomcat (a Java Servlet container). JBoss’s former CEO, Fleury, who coined and trademarked the “Professional Open Source” label, has greatly influenced the OSSg2 business model [ 6].

There are differences among these OSSg2 companies. First, Trolltech, MySQL, and Sleepycat are based on a dual-license strategy offering both commercial and OSS licensing options. Customers may use a product without paying a license fee; however, if they

⁵All uncited quotes are based on personal interviews.