Developing a business model around free and open source software (FOSS) can be a delicate balancing game. Many companies in this space opt for models in which revenue comes from sources such as services, rather than the software itself. However, the recently announced LinMin is taking a different approach with a new appliance and imaging appliance: Although it runs and works on FOSS, LinMin's software is proprietary. The company's reasons for this practice raise several core issues about the relationship between FOSS and proprietary software on one hand and business priorities on the other.
LinMin was founded last year when Laurent Gharda, one of the principals in Open Country, purchased the company's intellectual assets after the company failed to find a buyer for them. Gharda's analysis of Open Country's failure was that the company, which offered system management tools, was in an overly competitive market, and "expanded internationally before it should have," in part because of pressure from the venture capitalists (VC) who had invested in it.
In many ways, LinMin can be seen as Gharda's effort to correct the mistakes of Open Country. Its first product, LinMin Bare Metal Provisioning (LBMP), is designed to run on CentOS largely because that is what it inherited from Open Country. However, rather than focusing on general systems management, LBMP is designed for installation and configuration on multiple systems. It currently provides support for a wide variety of distributions, including Debian, CentOS, Mandriva, SUSE, and a wide variety of Red Hat releases, and has Windows XP support in early beta.
Just as importantly, LinMin's business model centers on Internet sales, rather than traditional sales channels. "Our target [customers], IT managers, are the people least interested in having meetings with sales people," Gharda explains. Moreover, in Gharda's estimation, Internet sales greatly reduces staff and business overhead.
Gharda says that he had no need for outside investment in the company, and is glad to avoid it, even though he says that he could have found it easily. For one thing, he is planning on slow, steady growth based on undercutting competition such as IBM Tivoli and Red Hat Network, rather than the overnight successes that are most attractive to early stage investors. In his view, venture capitalists would be likely to insist on a more traditional approach, with sales staff and participation in trade fairs -- and, under this approach, he says, "before you know it, 50-80% of your operating costs go to head count." This time, Gharda is determined to do things his way.
FOSS and business
Gharda is no stranger to FOSS technologies or the community. Besides offering various GNU/Linux distributions, LBMP is based partly on Webmin, the well-known browser-based system management tool. In fact, Gharda is not only a friend of Jamie Cameron, Webmin's lead developer, but LinMin is a sponsor of the project, and funded development of a module for integrating the Bacula backup application into the software. In addition, Gharda sits on the board of directors for CodeWeavers.
However, despite this experience, Gharda has chosen to release LBMP as proprietary software -- an option available because Webmin is released under a BSD-style license that, unlike the GNU General Public License, allows developers of derivative software to relicense the results.
One of the reasons for this decision is Gharda's belief that a FOSS business model would almost certainly require investment. He points out that developing an open source product would take at least a year before a product release, and, during that time, some sort of funding would be required to pay both programmers and the marketing and sales staff as it ramped up. "If you take a look at the majority of the better-known open source companies out there, they're all VC funded," Gharda says. "And they have to be, because they have to sustain not generating any revenue during a long period."
Another reason Gharda chose not to take a FOSS approach is that he believes community development might make the software vulnerable to malicious code. It is one thing, he says, to have a FOSS monitoring tool in which the worse that can happen is that incorrect data is displayed. However, with a tool like LBMP, which he claims can set up a physical or virtual machine in as little as 15 minutes, the potential for creating chaos is much greater -- for example, a disgruntled employee could reprovision a server farm overnight.
Gharda acknowledges that this argument for security by obscurity is not universally accepted, and that software like LBMP potentially can be misused by anyone with access to it, yet he still maintains that making it open source would open customers to Trojan-like attacks.
However, perhaps the largest reason for LinMin's decision is that most customers are unconcerned with licensing. At Open Country, Gharda says, he experienced some friction "with a fraction of the open source people who are true purists (and there's nothing right or wrong about being a purist)." In addition, he says, "There might have been two or three editors who were pure open source that were questioning how we did things because we didn't have the traditional open source business model."
By contrast, he says, "I find that more pragmatic individuals think of time as money, and aren't really as religious about the concept of whether something is open source or not. We talked to customers -- and that's really who we're most interested about -- and they don't really care whether it's open source source or proprietary so long as it does the job."
Gharda does not rule out a greater role for FOSS in LinMin."There may in the future be an open source aspect to our business," he says.
However, for now, he sees no need. Although LinMin was only announced on March 11, already Gharda claims to have seen an unpublished analyst report that describes LBMP as a disruptive technology comparable to the Model-T Ford, in that it is making its technology accessible to a large group of customers who could not previously afford it. So, for now, Gharda seems content for LinMin to remain a hybrid -- a proprietary company using open source technologies and offering services for free software users.