With friends like AWS, who needs an open source business?
In December, a New York Times article suggested that Amazon Web Services (AWS) was strip-mining open source projects by providing managed services based on open source code, without contributing back to the community.
In response to the article, Andi Gutmans, vice-president of analytics and ElastiCache at AWS, wrote a blog post claiming that customers have repeatedly asked AWS to offer managed services for Elasticsearch and other popular open source projects.
“A number of maintainers of open source projects build commercial companies around the open source project,” he said.
“A small set of outliers see it as a zero-sum game and want to be the only ones able to freely monetise managed services around these open source projects. As such, they have gone back and altered the open source licensing terms, co-mingled truly open source with proprietary code.”
Open source licensing aims to encourage innovation by enabling contributors to build new functionality as a branch of the core open source code. The project maintainer can then choose to incorporate this contribution into the core code.
In open source business models, some pieces of functionality are left out of the core code to enable the developer behind the original project to charge for enhancements, such as those that offer functionality required by enterprise customers.
Some companies have also tried to offer managed services for their open source products to provide their products as software as a service (SaaS) for enterprise customers.
Commenting on the New York Times article, Abby Kearn, executive director at Cloud Foundry Foundation, said: “When the software behind a commercial product is open source, there’s nothing to stop someone from building another commercial software offering.
“I won’t argue that many of the companies mentioned in the article have changed their business strategy since AWS began using their open source code,” she said. “But ignoring the open source method by which these individuals created code and built companies around it is missing the bigger picture. And AWS is using what this open source ideology has afforded them in the form of really good code.
“As my colleague Chip Childers, CTO [chief technology officer] of Cloud Foundry Foundation, recently wrote, open source works best for a technology company when it’s adopted as a series of strategies and tactics that support an otherwise sound business model – not the other way around.”
Is proprietary open source viable?
In March 2019, Sid Sijbrandij, CEO and co-founder of open source DevOps tools company GitLab, warned that the biggest challenge commercial open source faces is how to deal with hybrid cloud providers.
“Commercial open source companies such as Confluent, which makes Kafka, then the hybrid cloud providers take the Kafka open source code and offer that as a service, competing with the SaaS services these companies were betting on to generate revenue.
“This has led a number of open source companies, such as Redis, MongoDB, Elastic and Confluent, to introduce non-competing licences, in which managed services are required to pay a licence fee.”
But, according to Sijbrandij, this change in licence means the code is no longer open source. “We want these companies to do well, but we also love the lack of lock-in that comes with open source.”
He described how AWS directly went after the value people pay Elasticsearch for, in the enterprise version of its open source product, by creating a fork of the open source project and commoditising the enterprise add-ons by making them freely available. He suggested that It is much easier for an open source project to become commoditised if the code offers open APIs.
Targeting different types of buyer
GitLab’s approach has been to target different types of buyer, as Sijbrandij said: “If your customer is much more price-sensitive, they are more likely to go with an open source offering, than your paid-for product.”
The company offers is a free version of GitLab based on the core open source code for individuals; managers pay a small monthly subscription for additional features, while the most expensive version of GitLab, provides full oversight of the DevOps lifecycle across multiple projects in an organisation.
“You are less likely to become commoditised if you have more proprietary functionality,” said Sijbrandij.
This model has evolved over time and is currently, the way GitLab commercialises its open source product. But business models do need to evolve, and some experts warn that this is something open source companies must now face. But how open source businesses can continue to generate commercial value in the intellectual property in their open source projects has become a hotly debated topic.
“In my opinion, capitalism and open source function best when there’s robust competition based on equal access to opportunity,” said Mark Collier, chief operating officer at Openstack Foundation.
“While I can sympathise with companies who are under threat from large, dominant cloud platform companies, restricting competition through license changes to ensure your own monopoly is unlikely to produce a great outcome for the market or open source.”