The profit motive behind free software

Concerns about the cost of buying, maintaining, and upgrading traditional off-the-shelf software is driving interest in open source alternatives. But can open source software, which often can be obtained for free, survive for the long term if no one can make money off its distribution?

Already it appears that the answer is no, since the most widely used open source product to date, the Linux operating system, is distributed by two companies—Red Hat and Novell—with clear profit motives. Novell became the distributor of the SUSE version of Linux early this year when it paid $210 million for the German company that developed the product.

Users can get copies of both Red Hat and SUSE Linux for free, but they typically pay the respective companies to support the systems for them. That also is the case with an open source business integration and process-management application offered by WDI, a subsidiary of Brunswick Corp.

J.T. Smith, director of technology, refused to disclose WDI's revenue figures, but he did say roughly 300 customers have purchased books, training, and support for WDI's open source application. He also said WDI is meeting the financial goals set by its parent company.

The company that distributes MySQL, an open source database, actually sells licenses for its product to commercial users while still offering it free to non-commercial users.

"Even though we sell commercial licenses, our prices start at about $500 per server, whereas if customers went for one of the major closed source databases, the price could be $50,000 or more," says Zack Urlocker, a VP with MySQL AB, which reported $12 million in revenue for fiscal 2003.

That amount is miniscule when compared to the likes of Oracle and Microsoft—the two dominant players in the database market—but it is double MySQL's revenue from the previous year, indicating strong interest in the open source database.

Still, how much the open source vendors can grow is an open question.