Jonathan's Simple Explanation of Volume.
By draks on Oct 17, 2007
I was at the Sun internal open source conference for the past 2 days. Our keynote speaker was Jonathan Schwartz and it was interesting to hear him talk about his strategy and, this is the key bit to me, his frustration with the inability of employees, customers and partners of understanding our open source message. He, like me, constantly gets a question that goes like this: “Now that our sw is free why do we need a sales force and how do we expect to make money?” Jonathan answered this in a very simple way by pointing to a download map that shows all the ISPs from which our sw was downloaded. He points out that our software (in this case lets use GlassFish) is being downloaded in more regions than we sales people (Sun has no sales people, for instance, in Madagascar). By reaching these people we now have much broader distribution than we could have ever gotten by having to ship out sw CDs upon request or by having expensive sales people call on these developers.
Next he points out that Sun's main customers, those large enterprises that see sw as a competitive advantage, they embrace the idea of free sw, but will always buy a subscription or service contract because they cannot afford to ever have down time. The cost of downtime to a bank, a financial exchange or a shipping company is so large that the cost of a subscription to Sun's commercial sw packages is a very minor expense.
To summarize, the free people will never pay for support, but eventually they might get a job with the enterprises that do and Sun will benefit because these developers are familiar with Sun's products and that's good for us. Enterprises will always buy support and it is them that we target with our commercial distributions of open source. I think the ultimate answer is in the revenue and profitability of our sw division and at some point our financial people might disclose that information separately and we will have data on which to judge this revenue model.