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Open Source Business Models

Some questions always bugged me right since I got acquainted with Open Source software concept. Why Open Source? How do people make money out of Open Source? Who provides money for providing such software?
Luckily for me, I got an Internship at SAP in the Open Source Research Group which helped me to answer these burning questions in my mind. The business models for the Open Source are as follows:

*Providing services and distribution of Open software
A typical example will be Red Hat Linux. Here you make money in the services provided and not for the actual software license.

* Development and distribution of proprietary and open source applications for Open Source platforms
This may include developing some add-ins and enhancement features for an existing Open Source application.

* Using Open Source Platform for development of custom software
One can use Linux instead of Windows for custom software development and save money for installing and licensing Windows.

* By having a company’s employee on the major open source projects will increase the value of the company, keep it updated on the current market condition and most importantly can direct the open source market in a direction which will be profitable for itself.

* Counterbalance the dominance of a particular product or technology
European community considers Open Source as an effective technique to counterbalance the American dominance and strengthen itself.

*Supporting Open Source to make one’s hardware products more attractive
IBM and Sun support Open source packages and Linux to increase competitiveness against the Windows-Intel platform.

*Software compliance and License related services
Providing services checking compliance for existing software used in companies which were built in-house or through a third party vendor.

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