There Must Be 50 Ways To Profit From FLOSS

The old school types constantly complain that FLOSS and */Linux cannot possibly succeed because there’s no profit to be made selling software licences. That argument is irrational because it assumes selling licence is the only way to make money from software.

I have made part of my living just using FLOSS. That’s huge. There are lots of businesses making money other ways:

  • selling support for FREE software like RedHat,
  • selling hardware that uses FLOSS, like most OEMs lots of specialists, and
  • selling some other good or service with FLOSS in the mix somewhere.

The latter is what Amazon does, selling Kindle “e-book readers” (and flash-lights now), including FLOSS in order to facilitate the rest of its business selling paper book, e-books and everything else. If you as a consumer have a personal computer with some defaults pointing to Amazon that you bought at a reasonable price, wouldn’t you? Of course some might not but many do. Enough to provide the return on investment separate from the price of the software licence ($0) and the device (at cost).

“We sell the hardware at our cost, so it is break-even on the hardware”

see BBC News – Kindle Fire HD and Paperwhite sales make Amazon no profit.

The Kindle made up about 22% of unit sales of tablets in USA. Amazon is selling a lot of books both paper and electronically. So many that Walmart and Target have stopped selling Kindles because they are too strong a competition for their trade in books.

Call it advertising or “cost of selling” but the return must be good enough that Amazon continues. In the meantime you and I get a great price for a useful gadget and other hardware/software makers have some pretty stiff competition. Wake up OEMs and retailers. If you won’t supply the products the world needs someone else will. Selling high-priced Wintel stuff cannot compete against rock-bottom prices of devices like the Kindle. The market understands this for smart thingies of all kinds. This year the market will understand that Wintel cannot compete on price/performance also. There have been three quarters of disappointing sales of Wintel. Someone would have to be pretty thick not to get the message.

About Robert Pogson

I am a retired teacher in Canada. I taught in the subject areas where I have worked for almost forty years: maths, physics, chemistry and computers. I love hunting, fishing, picking berries and mushrooms, too.
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One Response to There Must Be 50 Ways To Profit From FLOSS

  1. dougman says:

    Agreed, I make a decent buck fixing computers, repairing Windows and deploying Linux.

    M$ is fairly thick, it needs to be broken up into smaller portions.

    Small startups are awesome to work at, after they grow into the 25-50 employee size it’s time to leave. The bureaucracy and management become stifling of innovation typically.

    Here are some things thick-head Ballmer should do, but won’t:

    – FOCUS is what management is missing. “If you’re unfocused and you’re trying to compete with a focused player, over time the focused player wins”

    – Outside of its core products, Microsoft does too many things and fails at most.

    – M$ needs to remove of all of the crap and just do a few things great, instead of trying to do them all. Sorry, M$ cannot be the center of the IT universe. Also, a follower doesn’t win. The big money is already made by others.

    – Windows 7, it took three tries to get it right (after XP and Vista). Again, lack of focus.

    – The world is passing M$ by, as management is asleep at the wheel.

    There is no direction, just same ol’ crap. They create a new skin for the user interface and says its the latest and greatest innovation. Those that ignore history are doomed to repeat it.

    Microsoft should focus on its core competencies and get rid of everything else. To anyone that has studied business history will know, when companies think they are omnipotent, they fail. Some survive in different forms (IBM comes to mind) and some fail (Kaypro, Digital to name a few)

    To those that “know technology” you know that any company that has tried to “corner the market” by being all things to all people has failed. Even high flying Apple caters to a relatively small part of the market, they just do it very well, in fact they do it better than anyone. Jack Welch said it best, if you can’t be #1 or #2 in a market, get out!

    Microsoft should take a lesson here

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