The Sun Model

Jetting away

As time has gone by, a clear "Sun Model" for open source business has been emerging, at least to my eyes. The summary of it is:

  1. remove barriers to software adoption between download and deploy;
  2. encourage a large and cohesive community of software deployers;
  3. deliver, for a fee, the means to create value between deploy and scale, for those who need it.

Each software team at Sun interprets this model in a slightly different way, but the model holds pretty much everywhere and works regardless of the license for the code. As a business model, it doesn't have much to say about the nature of the development community, but I believe dysfunction in that area is a barrier to adoption so it's always an issue if dysfunction exists.

This model is the natural progression of the concept of monetising at the point of value, and I hope to explore it more over the coming weeks. Feel free to ask questions below about the things needing clarification.

Comments:

And the result is that you only pay the fee if, and when, the products start generating value for you.

You aren't getting ripped off of your money before you can pay... you are only offered value add services which you can elect to purchase once you have started making your own money or generating your own value from our own software products. At this point, the customer usually has the means to purchase these services.

Posted by Gilles Gravier on October 30, 2008 at 07:45 AM PDT #

The tricky bit with this model is that it is too hard to make enough $ to justify all those engineers. Why? If the code base is commercial quality (a given with Sun), deployers often don't need your services or add-ons to scale. They can figure it out themselves, or only a small fraction of deployers will scale big enough to need extra help. Or the community just builds a free alternative add-on.

The real Sun model, which could work, but is seen as unpopular with analysts and investors and people focused on everything "paying its own way", is that ubiquitous software platforms driven by potent open source development and deployment communities creates "opportunities to monetize" hardware and services - aka "drag". You still need racks of humming machines to run all that free stuff. Sun's challenge: deliver hardware and professional services that run the free stuff with better ROI than anyone else's gear. Then, figure out how to account for the drag, so that the software strategy of creating ubiquity and mass adoption gets credit for dragging all that hardware along, and the credit justifies all those engineers.

-- rms | @richsands

Posted by Rich Sands on October 30, 2008 at 08:20 AM PDT #

Or to put it another way, Sun provides commodity software but differentiated hardware and services.

At least you didn't trot out the all software should be free as in speech argument. In capitalistic society humans have a right to be paid for their work.

I'm interested to know how you think the community of non-Sun developers will get paid in the long run?

Posted by Andrew on October 30, 2008 at 08:56 AM PDT #

@Andrew: The same way Sun will, by selling their differentiating skills to provide value to deployers, or by selling the product/service that is made possible by their deployment of the software. As I have said before, I believe less than 25% of open source developers do it as a non-compensated hobby.

Posted by Simon Phipps on October 30, 2008 at 09:01 AM PDT #

Simon,

I appreciate you sharing your thoughts...

Do you view Sun's open source eforts as a sort of loss leader for system sales or are the open source efforts generating enough cash in themselves to be a profit centre?

Posted by Ché Kristo on October 30, 2008 at 10:32 AM PDT #

Hi Che. They are definitely not intended as a loss-leader.

Posted by Simon Phipps on October 30, 2008 at 01:40 PM PDT #

"As a business model, it doesn't have much to say about the nature of the development community, but I believe dysfunction in that area is a barrier to adoption so it's always an issue if dysfunction exists."

What do you mean by that?

Posted by UX-admin on October 30, 2008 at 05:36 PM PDT #

Hey Simon

Shouldn't there be an initial "Step 0" that precedes the others i.e. "Make Sun's FOSS SW widely available and Drive Downloads"? I would think this would be the widest end of the funnel. A big part of this would be Sun's strategy of including its FOSS software in various GNU/Linux distribution.

Posted by Barton George on October 31, 2008 at 07:31 AM PDT #

[Trackback] What is the rate of depreciation of software, or in other terms, "when does the value of a piece of code become approximately zero?". The second aspect to this is how much of the license fee for a new version is for code that has reached this $0 value....

Posted by Thunking for work on October 31, 2008 at 10:17 AM PDT #

All code ages and becomes part of history. Fixes, enhancements, and integration challenges make expertise regarding even the oldest code in popular use valuable. Sun and others who are or become competent in providing useful services around Sun's Open Source Software stand to get ample revenue to feed the dog, pay the rent, etc. At least that's our view.

Posted by Marty Heyman on October 31, 2008 at 12:29 PM PDT #

I think the speed of which you need to scale is important (first derivate ;)), not that you want to be able to scale. You don't pick a tool if it doesn't scale. If you did open source wouldn't stand a chance against cripple ware from Microsoft or Oracle.

Posted by Kristofer on November 01, 2008 at 06:08 AM PDT #

@Kristofer: Totally agree with you there, I think an important source of value, which can definitely be sold, is the know-how to get the scaling right first time. As to "You don't pick a tool if it doesn't scale" I am not so sure about that, I can think of a famous whale that thinks otherwise :-)

Posted by Simon Phipps on November 01, 2008 at 06:12 AM PDT #

I agree with Barton George.

Posted by Roy Schestowitz on November 01, 2008 at 10:39 AM PDT #

Also, since you rely on your software spreading as widely as possible, Sun should consider giving a properly-licensed ZFS to Linux and 'seed' the market. It didn't work out too badly for some guy called Linus. Morton objected to an OpenSolaris merge, but ZFS alone makes more sense.

http://www.internetnews.com/storage/article.php/3782151/Sun+Pushes+ZFS+Deeper+Into+Solaris.htm

Look how much value MySQL gained by giving its wares away.

Posted by Roy Schestowitz on November 01, 2008 at 10:42 AM PDT #

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