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Open Source:

Freemium with a Twist FREE AS A BUSINESS MODEL

97

Business models in the enterprise software while protecting them from the uncertainties new release—the traditional software revenue PATTERNS
industry are usually characterized by two traits: surrounding a product not offi cially “owned” by model—it sells subscriptions. For an annual
First, the high fi xed cost of supporting an army anyone. Red Hat benefi ts because its software fee, each client enjoys continuous access to
of expert software developers who build the kernel is continuously improved by the open the latest Red Hat release, unlimited service
product; Second, a revenue model based on source community free of charge. This substan- support, and the security of interacting with
selling multiple per-user licenses and regular tially reduces Red Hat’s development costs. the legal owner of the product. Companies are
upgrades of the software. Naturally, Red Hat also has to earn money. willing to pay for these benefi ts despite the
Red Hat, a U.S. software company, turned So rather than charging clients for each major free availability of many versions of Linux and
this model upside down. Rather than creating other open source software.
software from scratch, it builds its product on
top of so-called open source software developed Red Hat
voluntarily by thousands of software engineers KP KA VP CR CS
software
around the world. Red Hat understood that software
support services self-service &
free (linux) open
companies were interested in robust, licens- software free (linux) open direct access to
source based
source based
software
self-service
ing fee-free open source software, but were versioning & software engineers self-service
testing users
users
users
reluctant to adopt it due to concerns that no (linux) open
source
single entity was legally responsible for provid- development KR continuously CH
ing and maintaining it. Red Hat fi lled this gap by community c continuously ontinuously enterprise
upgraded,
upgraded,
enterprise
RedHat.com
serviced, &
clientss
client
serviced, &
offering stable, tested, service-ready versions of Red Hat (linux) guaranteed Red Hat global clients
guaranteed
software
freely available open source software, particu- software software branches
larly Linux.
Each Red Hat release is supported for seven
years. Customers benefi t from this approach C$ R$ R$
pr pr pr pr pr pr pr
professional subscriptionofessional subscriptionofessional subscriptionofessional subscriptionofessional subscriptionofessional subscriptionofessional subscriptionofessional subscription
cost structure contains professional subscription
because it allows them to enjoy the cost and elements of a service company free softwaretwaretwaretwaretware
free sof
free sof
free software
free sof
free sof
stability advantages of open source software,
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