Open Source Business Models - Phd Executive Summary

The Open Source Software (OSS) has born based in a concept for sharing ideas and

cooperation (during the end of 70s and 80s), to build software components that could

be helpful to software developers and, as a consequence, to end-users. This principle

didn’t any premises on “money-making”, it was purely based on building a

cooperative and collaborative model able to develop a wider knowledge base within

the several working software developer’s communities.

With the growth of this cooperation, the software started to be deployed in the endusers

environments, namely started to exist in the enterprise environments. The first

set of packages of OSS software deployed on production environments was mainly

infra-structure software, like Operating Systems and Networking components. At this

stage, the first step towards professionalization began (beginning of 90s), because

enterprise customers wanted to have support for that software, due to the criticality of

production environments. Because of this kind of “insurance need”, the first

generation of Enterprise Open Source Software companies started to appear, being

RedHat Inc. the major successful case until today, keeping its business model focused

to enterprise customers and based on the supporting service of a core product (RH

Enterprise Linux operating system).

The speculation, at the end of the 90s and beginning of the 21st century, about the

growth of Open Source was astonishing, with major investments being made by

venture capitals and business angels, but there was a very important issue that

compromised that speculative growth: the OSS was on the bottom stack of the

software, meaning it didn’t give additional added value or market differentiation to

Enterprise customers, besides reducing some operational costs on the infra-structure

software. The rump-up for the OSS delayed to appear and the business models for the

OSS started to be questioned.

In the mid of the first decade of this century, a second generation of OSS companies

started