A significant point from the perspective of a company with a business based on Free and open source software is that it cannot expect to sell the software based on the exact business model as a company selling closed source/proprietary software. By having the source code freely available, whenever a competitor, customer, or community of developers improves the code, the vendor benefits because it, like everyone else, can adopt the upgrades and the software improvements. However, that means vendors cannot always compete on something like a feature-set alone—everyone could potentially offer the same features.
Companies tend to position themselves as experts in the area of particular open source projects and then work with their clients to provide the types of things they need the software to do (sponsored development, customization, migration, and implementation services). Or perhaps, a company with expertise in a particular area of software offers other types of support and services (around that project) to its customers. IBM, for example, offers hardware and implementation services.
In the case of a company providing hardware and implementation services, it's relatively simple to see the sense that open source can make. If you're making money off of the labor involved in your engagements or support services, or you're selling a physical good (say a corporate search appliance rack server), by participating in the FOSS project's community you leverage a massive amount of high-quality software at a low cost.
Another example of how a vendor can benefit by providing open source applications would include vendors that take existing open source software projects and develop customized offshoots, which address specialized needs. Take a company that would like to provide a specialized CRM system for the health care industry. Such a company can stand on the shoulders of an open source CRM project that has no interest in specializing its project for the health care industry. The company can then customize the application as a solution for its health care clients. The company benefits by not having to build its application from scratch and may even receive additional help in its area from others that need similar requirements.
Lastly, even if a vendor is not providing its own software on an open source basis, it can leverage the cost savings, support providers, and reliability of existing FOSS technologies. It can offer competitive pricing on its supply chain management solution to clients because the solution supports open source servers, databases, etc.
Companies tend to position themselves as experts in the area of particular open source projects and then work with their clients to provide the types of things they need the software to do (sponsored development, customization, migration, and implementation services). Or perhaps, a company with expertise in a particular area of software offers other types of support and services (around that project) to its customers. IBM, for example, offers hardware and implementation services.
In the case of a company providing hardware and implementation services, it's relatively simple to see the sense that open source can make. If you're making money off of the labor involved in your engagements or support services, or you're selling a physical good (say a corporate search appliance rack server), by participating in the FOSS project's community you leverage a massive amount of high-quality software at a low cost.
Another example of how a vendor can benefit by providing open source applications would include vendors that take existing open source software projects and develop customized offshoots, which address specialized needs. Take a company that would like to provide a specialized CRM system for the health care industry. Such a company can stand on the shoulders of an open source CRM project that has no interest in specializing its project for the health care industry. The company can then customize the application as a solution for its health care clients. The company benefits by not having to build its application from scratch and may even receive additional help in its area from others that need similar requirements.
Lastly, even if a vendor is not providing its own software on an open source basis, it can leverage the cost savings, support providers, and reliability of existing FOSS technologies. It can offer competitive pricing on its supply chain management solution to clients because the solution supports open source servers, databases, etc.
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