Canonical's services play: Revenue windfall or trap?
Apr 11, 2010, 19:03 (13 Talkback[s])
(Other stories by Neil McAllister)
"It's tough to compete in an industry where your customers
expect your product to be free. Such is the case with software,
where giveaways have seemingly become the norm. (Try selling a Web
browser or an audio player in 2010.) Some developers have turned to
advertising to underwrite their efforts. More recently, a few
software vendors have begun offering Internet services as a way to
add value to their products and raise revenue. But the latter model
is not without its pitfalls.
"Take Canonical, for example. The company behind the Ubuntu
Linux distribution now offers cloud-based data synchronization
services under the Ubuntu One brand. You can get 2GB of storage for
free; $10 per month gets you 50GB. Soon Canonical will be expanding
its offering to include contact synchronization for smartphones --
also for a fee -- and an Ubuntu One Music Store as a Linux-based
competitor to iTunes.
"These are bold moves, to be sure. Canonical seems to be
borrowing a page from Microsoft's playbook, where "software plus
services" is the new mantra. But there's just one problem: For a
small company whose core competency is software development, an
online service-based business is a whole new ballgame. Software
vendors who hope to follow in Canonical's footsteps should tread