Enterprise Linux Today: Making Money with Open Source: eGrail and Zero-KnowledgeDec 20, 2000, 09:09 (0 Talkback[s])
(Other stories by David Brauer)
"A look at how two companies are making money, in spite of the fact that they give away the source code to their software products. eGrail is doing it with a website content management application, while Zero-Knowledge is prospering with client-side Internet privacy software. And it's not all about selling services.
"Giving away eGrail code is, at the very least, powerful marketing. EGrail then cashes in by selling more powerful, specialized "modules" on top of the core system -- for functions such as e-commerce, core content management, and calendaring. Schliewe claims EGrail is the only major product in its category that that runs on Linux. That, together with releasing even dated source code, builds trust with potential clients' technical specialists. They can tinker with the free version and get to know the software, and often become the biggest evangelists within a firm when it comes time to make a sale. For example, Schliewe says, "Medtronic had downloaded the open-source version of the product, then decided to buy."
"EGrail isn't worried about competitors selling advanced modules based on the freely available core system, which carries commonly-used public licenses such as Mozilla. "EGrail is aimed at the Global 2000 enterprise, and those enterprises want to purchase it," Schliewe insists. "This will be one of their most critical applications. They're not willing to buy a product, based on ours but produced by another company, and bet their entire e-business on it. We're betting they want to buy pretty much a packaged application."
"Not only does Zero-Knowledge give away its Linux source code -- and eventually plans to give up the Windows core system as well -- the company can't, by its very philosophy, profit by selling customer information. Fundamentally, says Linux/Mac product manager Mark Scott, the company sells access to its Freedom privacy-enhanced network. ... The chief reason for going Open Source, Scott says, is transparency. "Our chief cryptographer is a guy named Ian Goldberg, who's very well known in the Linux community. The main reason we went open source is that Ian led us there -- we believe for our product to be 100 percent reliable, above any security breach, it has to be transparently open to peer review. People have to be able to see and to review the source code, to see what it does."
"Open source makes Freedom more robust, and, as with eGrail, helps Zero Knowledge more effectively create tech-side evangelists. Scott notes. "It's extraordinarily friendly for engineers, working for company X, who have heard about our privacy solution, to just download code and march it upstairs -- instead of lawyers working on mutual non-disclosure arrangements," Scott says. He adds that releasing code also makes it easier to incorporate Freedom into other open-source products. "Releasing code allows us to introduce our technology [into other products] more easily."