Open Source Profits During A Recession

Over the past few months there’s been a lot of talk about the possibility of a recession.

And for those of you working in various aspects of the IT sector, job security is certainly a concern.

This type of financial climate change can often lead to a difference in the software buying habits of the casual computer user and those in the business world.

In this article, we will examine the possible path of anyone who suddenly falls off of the employment train and then uses open source software to maintain a comfortable lifestyle — while helping others along the way.

By utilizing what is already out there, IT firms and individual consultants, among others, can turn things around fast by offering quick value to their customers.

Open Source Software Just Makes ‘Cents’

Take any typical poor college student. Offer them a packagedcopy of Open Office for $10 or a new copy of Microsoft Office at the latest price and just watch the law of value come into play.

Unless that student has more money than sense, they’ll pick Open Office (Oo) every time.

The key to making this happen, however, is largely due to how you go about presenting the product.

If you have Oo running on a notebook attached to a large monitor that allows foot traffic in a public place, people will stop and ask questions as they are generally not too keen on playing for the latest “upgrade” for Microsoft office unless there is a seriously compelling reason to do so.

I think the same rule applies to packaged, easy-to-install copies of GIMP, Scribus, and Tux Paint.

Again, this is software that can be bundled onto one CD and ready to be given out to those who are interested. The tricky part is making money with it.

Selling Open Source Or Adding Value

A lot of people have an issue with people simply packaging up a copy of Oo, using its logo, then selling it for a reasonable amount of money.

Despite this being perfectly legal to do so long if certain guidelines are met, I am going to tell you how to keep the open source enthusiasts from running you out of town.

Create and then bundle how-to videos using screen-capturing software to help new users become more comfortable with the software.

It not only adds value to what you are trying to sell, it also means that you are proving to enthusiasts that you really are trying to help people adopt this software, not just working to make a fast buck.

So you start out offering open source software along with a means of understanding how to successfully migrate to it and utilize it on a daily basis.

This can be done with freeware like WINK, as company costs are under a strict lock-down during these tough financial times.

Using WINK means that you would be able to create simple, easy-to-follow tutorials that even the most die-hard, non-technical-type user could follow.

Another benefit for the business that ends up finding themselves switching to open source software is not becoming locked into the proprietary nightmare of one-company file formats.

This is a good position to be in at any stage of your business development, especially during a recession. From here, the switch to Linux is often times merely a set of tutorials away.

Designing Software That Would Not Otherwise Exist

I have seen evidence of this time after time: An open source development team is called in to bail out a company locked into something that is no longer supported.

They need a replacement, unfortunately, it does not exist. So would they hire open source developers over that of closed source?

Yes, because open source is more flexible. Closed source software development is generally an afterthought, If the market is perceived to be too small, chances are solid that closed source developers have opted to not bother with it.

Another thing to remember is that once your custom software is released as open source, it is free to be further developed, often to your own benefit and NOT at your cost.

Great examples would be the add-ons and plugins for software like Firefox or WordPress.

Both have immensely benefited from being open source. And it should be noted that both projects are quite profitable.

Often times, open source software is developed to solve one individual group’s problems. This was a large reason why Firefox came to be in the first place.

Mozilla Suite was just too bloated and the developers had little interest in using Internet Explorer.

But how about closed source software looking to take a turn to the open side of the fence?

Could a closed source company save their bacon by changing their licensing scheme? This may surprise you, but in some instances, it can work.

To Save A Software Company

Let’s look at this from the perspective of a company, who in the past made their revenue by selling rather high-end software to other large companies.

They do provide support for the software at no cost and have done well with the high-end sales until our fictional recession hit.

Now let’s say that this company has fallen on hard times. Facing a fate like that of SCO, the company opts to try something new and risky by changing their licensing.

They opt to release the next version of their software into the wilds of an open source license, along with additional features.

One possible result? Companies adopt the software, which is using a localized application to now interface with web based functionality hosted by XYZ Inc.

Anyone could take this code and duplicate it, however this has not happened, as it is simply not strategically valuable to do so.

The company, who used to make one-time sales with a localized-only application is now giving away the localized application which with the new release, is working in conjunction that is largely controlled by the same company — on a subscription basis.

That low cost subscription provides access to the web services and for a little more, a help desk.

So why would this work, while simply giving away something like an RSS reader never make a dime? Simple, it’s about providing value.

Take that same generic RSS reader — provide hosted RSS feeds that are combed through daily for quality and if possible, targeted to each subscriber’s needs.

Toss in some extra server side features, open source the whole thing, and you have a freely available RSS reader, that will work as a stand alone application, making your software company money.

It’s simply a matter of restructuring where the profit center is and tying it into a valuable resource not seen elsewhere.

Open Source, Tough Times, And The End User

Thus far, we have talked about what is in it for the companies: those looking to sell software, those looking to profit in other ways, and even those simply needing to cut existing software costs.

But what about the average home user? College students, single moms, the recently laid-off — what is in it for them?

Simple — freedom to choose if and how much they are going to spend in order to use the software they need.

Many applications, such as Open Office, Scribus, Mozilla software (Firefox/Thunderbird) are used on multiple platforms.

But at the end of the day, each is 100 percent freely available, which means that users are not barred from using these applications due to economic uncertainties.

So it is fair to say that during any uncertain economic speed bump, access to open source software means freedom to provide the following benefits for anyone who wishes to implement them:

Take existing open source software, package it, provide something you created of value to bundle with it (tutorials, whatever) and make some extra cash.
Save your company unnecessary upgrade expenses with software that puts you in the driver’s seat.

Spend only what is needed for the level of functionality you need.

Free yourself from locked down file formats. Should a project stop being developed, your company is free to hire a freelancer to add anything needed to it rather than remaining stuck with something now totally outdated.

Reinvent your own software company should those high-end sales fall flat for some reason.

Find a way to tie in some web-based functionality to the now freely available localized app. It will not make as much out the door, but it is residual versus a one-time lump sum.

I will not argue that historically, open source companies have not fared as well on the stock market as some closed source companies.

Then came companies like Google, which uses open source software everyday.

So let Google be a lesson to us all, especially if anyone out there is in the “software business.”

Because even if we fall into a recession, there remains plenty of potential for consumer savings, business growth, and even new markets in otherwise tough times.