augment the original source code and do not wish to release the modifications under an OSS license, they must buy a commercial license. Mike Olson, former CEO of Sleepycat, acknowledges that the dual licensing strategy is a “great judo trick for competing with proprietary vendors.” JBoss is based on a Lesser General Public License (LGPL) license and only receives revenues from services including software support, training, and consulting. A second difference is that, whereas Trolltech, MySQL, and Sleepycat own the source code underlying their products (which allows them to offer a dual-licensing scheme), JBoss does not own the code of the software products it services. Nevertheless, as an OSSg2 firm, it controls the code more tightly than companies based on the other

OSS business models. For example, the extent of its contribution to its three leading products is 85% for JBoss AS, 95% for Hibernate, and 60% for

Tomcat [ 4].

OSSg2 Characteristics

Improve Customer Value. Three key traits of OSSg2 firms provide specific benefits to their customers and can thus improve their value proposition.

Accountability. All four

OSSg2 companies we studied indemnify their paying customers from any legal liability associated with their products (potential patent or copyright infringements). The indemnity provision provides a necessary level of security for potential adopters of OSSg2 products who are still apprehensive about OSS. This accountability may do more than just bring OSSg2 companies to parity with proprietary software vendors. Sleepycat’s former CEO, Mike Olson, asserts the risks of patent infringements and copyright problems are lower for an OSSg2 company: “Anyone that wants to can look at my software. If there was a claim pending, if I had stolen something, it is overwhelming likely that it would have been seen by now. […] No proprietary vendor’s customer has that degree of assurance. If there has been intellectual property misappropriated in that product, it is a secret and it may still be lurking” [ 7].

From Olson’s perspective, OSSg2 companies offer greater peace of mind than proprietary firms, because patent or copyright infringements should be uncovered relatively early—reducing the impact the copyright infringements may have on adopting customers’ systems.

Talent base. Each OSSg2 company retains talented coders, wherever they are located, to maintain and support its software products. Indeed, all four OSSg2 leaders insist they recruit from among the world’s best and most productive programmers, drawing not only from the immense pool of first-generation OSS contributors, but also from a growing collection of emerging talent. MySQL and JBoss allow their programmers to live wherever they wish. In addition, recruitment is different. Typically, those employed by OSSg2 companies have an established record of contributing code and identifying bugs as volunteers

Open source programs have

moved beyond the desktops of code hackers

and are now in production in a growing

number of corporate IS departments.

 

prior to their hiring. They have demonstrated their understanding of the code base and their ability to fit within the OSS development culture. This is an important competitive advantage because it means OSSg2 companies reduce hiring risks without significant up-front recruiting and training costs.

Trolltech’s employees (approximately 230) come from more than 20 different countries; they were recruited almost exclusively through the OSS community. Trolltech has learned that great developers want to work with each other. When asked about the criteria for hiring, CEO Havaard Nord emphasized that what really counts is “code, code, and code…merits…formal education is less important.” Trolltech’s employees are the company’s most valued assets. The founders and the employees—owning two-thirds of the shares—control Trolltech. Outside investors have majority ownership and control of many software companies. Only in rare cases does Trolltech get outside contributions for its products. When this happens, either the submitting contributor is hired (if coding quality and knowledge of the product have been demonstrated) or the firm gets ownership of the code. As a result, Nord claims Troll-