October 18, 2005

Trolltech: A case study in open source business

Author: Tom Chance

With a customer list that includes Opera, Skype, German Brockhaus Encylopaedia, Google Earth, Adobe Photoshop Album, and the KDE Project, Trolltech is obviously a successful company. It has grown each year since it was founded by selling products that compete with free-of-charge alternatives such as Java and .Net. It now sponsors several free software developers who share all of their work with the community under the GPL. Let's take a closer look at a company that makes money from free software.

Founded in 1994 by Haavard Nord and Eirik Chambe-Eng, the company's goal was to create a free cross-platform GUI toolkit that would simplify application development. Nord and Chambe-Eng self-funded Trolltech and created a toolkit they named 'Qt,' pronounced 'cute.' By 1998, when they attended the KDE Project's first conference, Trolltech had 6 employees and 42 paying customers. Today it has 140 employees in four countries and more than 4,000 customers. Sales last year were $13.4 million. The company's success was not lost on the investment community. In a recent round of financing, Trolltech received $6.7 million in venture capital.

Trolltech's growth was made possible by the company's dual-licensing scheme. It released Qt under the GPL so that anyone would be free to develop their own free software using Qt, and also offers a proprietary licensing that enables companies to develop proprietary applications using Qt for a fee. When Qt is licensed under the GPL, all derived code must also be licensed under the GPL.

Initially, Qt was available only under a proprietary license that allowed non-commercial development. That attracted a lot of criticism from the free software community. Now it is available under the GPL on all platforms, including Linux, Windows, and Mac OS X. Yet, some still argue that the dual-licensing arrangement is a dirty deal, supporting the free software community while penalizing proprietary vendors whose work might otherwise boost Linux's market share. That is probably not true, and here is why.

The KDE Project was the first, and remains the largest, example of a free software product using Qt. Eric Laffoon, a KDE developer and owner of several businesses, has defended Trolltech numerous times. He argues that because the licenses cost so little and Qt boosts productivity so much, independent software vendors (ISV) creating proprietary software would be crazy not to buy the proprietary licenses. Qt's ever-growing customer base, which includes major customers like Adobe, as well as many small and medium businesses, seems to back this point up. Laffoon further claims that by choosing the GPL, Trolltech is promoting freedom more by giving companies a good reason to release their work under the GPL.

Support of that statement can be found in the results of annual surveys undertaken by Trolltech. The data from the most recent survey showed that 28% of its customers have participated in free software projects, with 68% targeting the Linux platform. According to Trolltech's president and co-founder, Eirik Chambe-Eng, "Often we find that open source developers use their spare time to develop open source software and at the same time have a day job where they develop commercial software. They discover Qt through their open source work, bring it with them into the workplace, and then the companies they work for purchase commercial licenses from us."

Word-of-mouth recommendations, in conjunction with the notoriety received from successful free software projects, are important to Trolltech. Chambe-Eng described Qt as "a puppy-dog sale product," the analogy being that if you work in a pet store, all you need to do is put a puppy into a child's hands and half the sales work is done. According to Chambe-Eng, "Our challenge is to get engineers to try out Qt. If we get them to do that they instantly fall in love with the product." Free software projects like KDE do an excellent job of getting Qt into developers' hands, as evidenced by the surveys.

Having these two modes of operation -- having GPL-licensed products and proprietary licensed products -- allows Trolltech to fund its considerable expansion, while at the same time enabling it to promote free software. However, Trolltech goes further than just sharing Qt with the community. It employs a number of core KDE developers, most recently hiring Zack Rusin, a developer known for his cutting-edge work on X11, the graphics server used by Linux.

Trolltech employees are encouraged to choose their own projects, and on "creative Fridays" they can work on anything they want. Rusin says, "Trolltech gives me quite an unbelievable freedom," which feeds back into the wider free software community in the form of new and interesting code. Trolltech also currently sponsors several KDE developers to work on KDE, including David Faure (KOffice), Aaron Seigo (Kicker, Plasma, Appeal), and Don Sanders (Kontact).

In 1998, keen to cement its relationship with the KDE community, Trolltech and KDE e.V. created the KDE Free Qt Foundation. This enshrines an agreement between KDE and Trolltech that gives the Foundation the right to release Qt under a BSD-style license if Trolltech doesn't continue the development of the GPL edition of Qt. If Trolltech does continue in its benevolent role, then the KDE community continues to benefit from having a professionally developed toolkit. Should Trolltech ever go bankrupt, or be bought out (something that could become an issue as Trolltech is rumored to be going public soon), and cease to be so free software-friendly, the KDE community would be able to continue Qt development. Moreover, the choice of the BSD license makes it less likely that Trolltech would ever want to change its licensing, since if it did so another company could take the latest release of KDE under the BSD license and start developing its own proprietary product as a competitor.

Trolltech's support for the KDE community isn't all philanthropy. Volunteers submit patches to Trolltech and give considerable feedback, helping the company to improve its product. The KDE desktop environment is also a major showcase of its technology, which drives adoption in the free software community and among ISVs. The "win-win" relationship with the free software community also gives Trolltech the kind of reputation that, when combined with community support, adds up to a huge and free marketing machine. According to Chambe-Eng, these are "vital parts of our business model."

So what does the future portend for Trolltech? With a foothold in the mobile devices market, it has its sights set on Microsoft and Symbian, a strategy again aided by KDE, whose technology is now being used by Nokia engineers. Qt 4, the latest version of Qt, has been released under the GPL on Windows for the first time and sports a number of changes designed to help developers on that platform. While Trolltech's use of proprietary licenses is sure to draw continued criticism from some quarters of the free software community, the company's success is likely to continue, aiding not just Trolltech but also those using Qt.


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