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Linux Magazine: Can A Pure Open Source Company Survive?

Jun 24, 2000, 16:43 (5 Talkback[s])
(Other stories by Wendy Goldman Rohm)

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"Though he doesn't fall into the "doomsayer" category, Larry McVoy, CEO of Bitmover, Inc. and a former top scientist at Sun Microsystems, says it remains to be seen whether the business models of some of the most successful Linux vendors will be viable in the long term. Open source business models are further complicated by a unique factor: developers of free software are not always in it for the money, and idealism rarely drives profits. Without appropriate margins, argues McVoy, Linux companies cannot do for free software what commercial entities do best: funnel money into new projects."

"McVoy says that open source advocates like Bruce Perens, Eric Raymond, and Richard Stallman can only see the benefit of open source software from the end-users' perspective. "Their arguments are somewhat shortsighted," McVoy insists, "because they're fighting against the sort of evil world where it's been all proprietary and you couldn't get the source code. I'll be the first to admit the proprietary people have abused their end of the spectrum. But in solving that problem they're creating a second problem. They've gone so far in the other direction, they're making it very difficult for people to actually generate revenue off of stuff in this new space. If you can't generate revenue, you can't create new stuff."

"McVoy believes that, in the long run, pure open source companies will not have enough margin to continue to fund innovative software development. He also says that, ironically, open source companies are cannibalizing the sales of large corporations like HP, IBM, and Sun, whose revenues paid many of the engineers that contributed much of the open source code being used in Linux today."

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