This is a computer software business model and is a growing success.
If we take a company which sells their software for £300 and they have five thousand customers and 20% of these take out a £150 a year support contract they will show a gross income of £M1.65. But, remember, they have to give limited support to all their other customers as well.
Now supposing the company gives the software, and the source code (their intellectual rights) away free, and their five thousand customers grow to a hundred thousand customers. Supposing only 15% of these take out a support contract. This will mean an income of £M2.25. In addition, because the software is free, the company would not be required to give limited support which could mean more people may purchase a support contract. In addition to this, the company would establish a support forum where the customers would be willing to help each other. And before you scoff at this, it is happening everywhere, all the time.
Further to this, because the source code is available, others would add extra function to the program. The software licence would ask people who added functionality to send the code to the company who might add it to the next version. So there is less work for the support engineers and more can be employed in servicing support contracts.
Although I don’t have the actual figures (Canonical who wrote Ubuntu in 1955 is a private limited company) and released the software and the intellectual property rights (the source code) into the public arena, was a small company with less than half a dozen employees. However, as at July 2010, they have 350 employees in twenty-six different countries. All by giving their software product away free.
Canonical must make money or it wouldn’t survive and, as in my previous example, they make their money with company support contracts, training and proficiency certificates.
A lot of people say that businesses will never use Linux. This is a very outdated idea. For example, there are more servers in the world running Linux than running Windows. Out of the 500 “super computers” in the world, 94% run Linux and only 1% run Windows. With mobile telephones, The open source Android operating system from Google is expanding at a rapid rate and is due this month to overtake Windows Mobile in sheer volume.
I have recently learned that the French Gendarmes have moved 70,000 PCs over to Ubuntu, and are scheduled to move a further 30,000 this year. Spain have 500,000 Ubuntu PCs spread across their schools, colleges, universities and educational departments. Citroen have moved 100 servers and 20,000 desktops over to SuSE Linux.
Last week I attended a seminar in London called “Ubuntu in Business” where I learned of some major business software writers writing CRM and other large business programs for the Corporate marketplace.
We had short presentations from
- Chris Puttick of “Oxford Archaeology” one of the largest independent archaeology and heritage practices in Europe who took the strategic decision to adopt Ubuntu.”
- Colin McMillan of “Publicus Solutions” running Open SourceERP solutions on Ubuntu, success indeed in the distribution sector”
- Alan Lord of “Open Learning Centre” real and implemented Open Source solutions In The SME Sector”
- David Hopwood of “DSNetworx Ltd” making it easier for smaller business to move to open source”
- Jeff Nott of “Alfresco” complete content management systems
- Michael Judd of “Akuna Ltd” deploying a multi-site retail operations platform using Ubuntu, OpenbravoPOS, ADempiere & Pentaho for the retail sector
- Steve Young of “Likewise” a company extending Open Source into the enterprise’
One such program, “OpenERP” is a business management application, or ERP system, which consists of an integrated set of modules comprising of areas like accounting, manufacturing, stock management, CRM, sales management, logistics, and project management. This is a fully Open Source product consisting of over 350 modules and sold in over 45 countries.
Although the British Government have been slow in adopting Linux than their European counterparts, I have heard from one or two MPs that they are now looking at this more seriously.
There will be a second part to this story later when I have gone through all my notes of the meeting, but it will be after I have published the August edition of our newspaper at the end of this month.