Thursday, September 25, 2008

Commercial Open Source - Europe vs. USA

I am a big fan of Larry Augustin (specially since he invested in Funambol :-) and his blog. He does not write often. He writes in bursts. We have been blessed that September is a good one, hoping to see the next bursts before the end of the year.

Anyway, his last post is titled "Commercial Open Source in Europe Versus the US" and it analyzes the difference of attitude towards open source, in Europe compared with the US. It is an awesome post. The table below is the summary of his analysis and it is hard to disagree on any of the points.


European View

United States View

Primary reason for adopting Open Source.

Avoid vendor lock-in.


Key driver of commercial Open Source business creation.

Creation of a local software industry.

Venture capital/entrepreneur driven to create a big business and make money for investors.

Dual licensing business models.

Not true open source. Proprietary business models using Open Source for PR and marketing.

Widely accepted as the most common Open Source business model.

Software sales model.

Channel oriented: VARs and SIs.


Open Source business models.

Service and support subscription focused; 100% open source software.

US companies don’t want to be in the services business. The focus is on products, typically proprietary add-ons or an Enterprise Edition paired with an Open Source product edition.

Expectations around "Open Source" products.

All code is available under Open Source. There is often a community governance of community participation model.

Same, but not necessarily all products are available under an Open Source license. Commercially licensed versions of the products are commonly available. Projects are managed by a commercial vendor.

Somehow, I found that Americans envy Europeans and viceversa. American are way more vocal about it. Europeans are not, actually they might tell you the opposite, but then underneath they would like to be Americans. I have the luxury to be both, so I can speak freely ;-)

Larry's conclusion is that Europe is ahead of the US because people understand the real value of open source. That is because he is an American... If you look at Commercial Open Source people from Europe, you might notice a slight difference: we all moved to the US. Marten of MySQL, Marc of JBoss, Haavard from Trolltech, Chris of DB4O, myself and many more. Why? Because here you can make a software company big. In Europe, you can't (or it is 10,000 times harder).

Larry is on the point:
  1. Key driver of commercial Open Source business creation in Europe: creation of a local software industry. Good luck with that... Maybe in Paris, with government subsidy. We'll get to a Silicon Valley in Italy one day, but it will require US capital first. Building large companies without VCs in this flat world is nearly impossible.
  2. Open Source business models in Europe: service and support, no dual licensing. Good luck with that... Not a chance you can build a large company with services. Again, there might be few exceptions, but without licensing you do not scale. You end up in a situation of hiring a new guy for every new customer, with the customer asking for the old guy (the one that knows the product) and the old guy about to leave the company for his new gig. NOTE: I used a male example, not because Europe is sexist... (Well, it is ;-)
Bottom line for me: Europe might be ahead in the quest of using open source, usually taking advantage of the communities built around it and government subsidies. But when it comes to building open source companies, there is no comparison. The US is the place to be. And dual licensing is the model to beat. Let a European who built companies on services tell you...