Do customers want open core?

There is renewed and meaningful discussion going about open core with several good insights and arguments: Simon Phipps, Mark Radcliffe, Stephen O’Grady and our own Matt Aslett to name a few.

Still, when we consider the various people and sides arguing for and against pure open source, open core or something in between, I wonder if there is one key group being left out of all this discussion going on amongst vendors, open source companies, open core companies, open source projects, open source developers, open source investors, open source analysts and others: customers.

It’s been my experience that customers typically want the features and insurance (SLAs, indemnity, certification) of open core, provided it remains flexible and the code and option to self-support always exist with a usable, updated, free, open source community version. As we saw when we surveyed open source users and customers, while cost continues to be a big driver, flexibility is among the most cited reasons for and advantages from open source software. While ‘flexibility’ can be admittedly nebulous, what we hear from customers is that they want the freedom and free availability of open source software, but they also want and need the option of paid, commercial support, features and functionality.

Whether a vendor is pure open source or mostly proprietary open core, the advantages of open source software — reduced vendor lock-in, future-proofing and the freedom to continue working with the code, to work with other community members on the code and its direction, the option of self-supporting or otherwise continuing with the code, but not the vendor — all of these things come only with truly open source software and open source communities. I believe the community around the software and its well-being is the true differentiator when it comes to success with commercial open source, whether pure open source or proprietary-heavy open core. If the free, community version is truly crippleware or even if it is not updated and vibrant, then the vendor is less likely to reap or offer those advantages of open source. If the community version is comparable except for higher-level features, functionality and scale, and if that community is supported by the vendor and the community version is updated in parallel with the paid versions (which we typically see in successful open core models), then the vendor is more likely to reap and offer those advantages. The bottom line: flexibility and freedom for the user/customer are not tied to the vendor’s license or business model, be it pure open source, open core or other, but instead are connected to the state and health of the open source software community that is the basis for that vendor’s offering.

I’ve heard similar arguments and demands for flexibility — the option for free community versions that provide decent functionality and features along with the option for more advanced features and subscriptions in paid versions — from vendors that partner with open source software-based companies. Often, there is a reticence and inability, sometimes by policy or procedural rules, to effectively work with an open source software project or community, but once a vendor that supports that software and community commercially emerges, the opportunities for partnership become much more practical and doable. That does not mean the commercial backer has to take an open core route, but I believe the demand for things typically associated with traditional, proprietary software, such as SLAs, indemnity and certifications, are part of what drives demand for open core among open source customers.

This further reinforces the idea that the market and the customers will determine the success or failure of an open source-centered or focused vendor, regardless of how pure open source or proprietary open core they are. Whichever side or wherever in the arguments you find yourself, I believe we should consider IT end users and customers more in this discussion, since they’re always right, right?

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#1 Henrik Ingo on 07.08.10 at 5:08 pm

Am I being a total nitpick, but… a vendor could offer SLAs, indemnity and certifications and none of those makes the vendor open core (they don’t require closed source software), nor is open core required for it.

#2 Jack Repenning on 07.08.10 at 5:26 pm

Yes: I think this post may be comparing “communities at their best” against “corporations at their norms,” which might not be entirely fair. Henrik’s point is, roughly, “companies aren’t *necessarily* evil.”

However, I do think that communities are much more likely to be open, flexible, and responsive than corporations. Not because companies are necessarily evil, but because they’ve some tendency to become so when under duress: if you’re scraping for that last dime just to survive, you’re more likely to cross the boundaries of civility. Communities, on the other hand, may also become desperate, but their most effective and common response is to become more open, welcoming, and flexible. So, it’s not the “best to average” comparison that’s key, but the “worst to worst.”

And in the very very worst-to-worst case: proprietary code is in desperate danger of ceasing to exist along with its company, whereas community code can live even after the community completely dies, and can revive and grow again. “Can,” not necessarily “will,” but still …

#3 Jay Lyman on 07.08.10 at 5:30 pm

No, Henrik, you are not being a nitpick. I think I anticipated your point, which is valid. I do think that perceptually among customers, the SLAs, indemnity and certifications to which I refer are available primarily through vendors, commercial licensing and subscriptions. However, these are things that a pure open source vendor could provide. Still, I believe my point — that customers want freedom and flexibility to use free, open source community versions and also to pay (as they are sometimes required to) for non-open source features and functionality if they so choose — is valid. Perhaps a better example would be that customers typically want the higher-level features and functionality, such as remote administration or support for virtualized or cloud computing environments, that come as non-open source in an open core model.

Thanks for posting.


#4 Jack Repenning on 07.09.10 at 12:51 pm

To return to the core question of the post: actually, yes, I think some customers really *do* want “open source” — in fact, some customers really do want “free software.” But just as there’s a bit of cultural divide among providers (free source, open source, open core, proprietary), so also is there a divide among customers.

Interestingly, there’s some real tendency for customers who “just want something that works” to be non-users; corporate IT buyers and the like. Conversely, there’s some tendency for “live free or die” customers to be front-line actual users. And the reason’s not hard to find: a CIO has no practical expectation of fixing a problem or adding a feature or taking over stewardship of the whole project, anyway; whereas many front-line users not only *could* do these things, but actually *do* (of such are communities made).

It was trendy, not so long ago, to conduct and publish survey after redundant survey documenting that most companies *use* open source, while most CIOs think they do not. We seem to be getting over that, which may make the time right for surveys documenting that most customers *need* open source, while most CIOs think they do not.

#5 Ned Lilly on 07.13.10 at 6:05 pm

Agree, Jay, that flexibility is the watchword for customers.

At xTuple, we’ve got the FOSS open core PostBooks Edition, and the commercially licensed Standard and Manufacturing Editions. Commercial license can be either annual subscription or traditional perpetual (and you’d be surprised how many continue to opt for the latter).

xTuple runs on Windows, Mac, or Linux – on-premise, in a partner data center, or in the Amazon cloud.

Too much of the chatter/wisdom about open source business models has always been driven by VCs, in the opinion of this self-financed profitable vendor 🙂


#6 Jay Lyman on 07.14.10 at 12:22 pm

Thanks for posting, Ned. I think xTuple is a good example of a company leveraging an open core model because that’s what works for you and your customers, and not because VC backers are advocating or pushing it. I know we also both agree on the significance of a supported, vibrant community (including free version) for this open source stuff to work.


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