Abstract

Software industry has two business models: (i) proprietary software, and (ii) free software (FS) respectively open source software (OSS). Business Models for proprietary software development are well defined and easy to understand. They result from pure economically oriented behaviour of business players. The case is much more difficult for F/OSS. Cost and revenue structures of product development differ to a large extent from proprietary software development. Community based innovation and product development has more an evolutionary character than a planable one. Furthermore, the makers of F/OSS focus on technology rather than on the business aspect of their work, which results in great information asymmetries about what open source really is on the buyer side of the market. There is an obvious lack of ex-ante well defined business models for F/OSS. Thus, the aim of this research is to analyse open source software from a business point of view. Key aspects of F/OSS market will be analysed: (i) Total Cost of Ownership, and (ii) Information Asymmetries. Based on these aspects a marketing decision framework for F/OSS business models will be introduced.

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