Jabit

Many people often find it difficult to get their heads around how exactly open source companies survive, after all they give their product away for free. Today, one of the largest open source companies in the world, MySql AB, was purchased by Sun Microsystems for a cool $1 billion. Jonathan Schwartz, CEO of Sun, in a great blog post explains the economic justification for the purchase. In it he quotes Marten Mickos, MySQL AB’s CEO, on his explanation of the open source business model:

the spectrum describing the marketplace spans those with more time than money, who form the user and developer communities around free software; and those with more money than time, who purchase commercial support contracts typically in more mature enterprises. To win in the long run, you have to win on both sides of the spectrum - with the same product. Crippling products, or sneaky licensing exceptions don’t work - freedom does

Jonathan himself says of both companies:

we both invest in very high quality free software and the cultivation of large communities, then turn our efforts to monetize at the point of value for companies that want commercial support

Now that’s what I like about open source - it is an understanding of what customers value. How many companies out there don’t know what their customers value and how many don’t even try to figure it out. Remember it is the customer that defines value, you as a business are simply required to create it.