Open Source Alliance Cyberjaya

The Linux and Open Source Special Interest Group in Cyberjaya, Malaysia

Taking the plunge into open source

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More software companies are finding that the best way to make money with software is to give it away, cherry-picking open-source software practices for commercial gain.

On Monday, a small software company called Aras will release the code of its design application–written entirely with Microsoft technologies–and shift to an open-source business model.

For a small company faced with tepid growth, letting anyone download its application for free was a risk worth taking.

“We’ve been growing but growing at a slow and steady rate. It was our observation, and the board agreed, that enterprise software is on the verge of a big shift,” said Peter Schroer, president of Aras. “In open source, what’s left is the application layer, and we wanted to be the first to offer it, not the last.”

Aras’ decision to go open-source mirrors moves by hundreds of software companies adjusting to the popularity of open source, where a product’s underlying code is freely available.

With an open-source business model, companies often charge for services, such as support and product updates, to paying customers while allowing unsupported customers to use the product for free–or the companies offer a free edition in addition to a higher-end, paid version.

The effect of open source has swept through different corners of the software business, most profoundly with the Linux operating system and products that cater to software developers such as development tools and infrastructure software used to run Web sites and business applications. Nearly all of the largest infrastructure software companies–including IBM, Oracle, Sun Microsystems and Novell–have adopted some aspects of open source.

A handful of other companies are trying the open-source model in packaged applications, including SugarCRM, which sells customer relationship management software, as well as enterprise resource planning (ERP) application companies Compiere and OpenMFG.

By going open-source, Aras is trying to grow revenue in a product segment called product lifecycle management (PLM), programs for coordinating the design and service of manufactured products. The software is typically expensive, and the market is dominated by a few large providers, including Parametric Technology, Dassault Systemes and UGS.

With open source, Aras hopes to make its software cheaper than entrenched vendors and easier to roll out to many employees within a company.

The plan is to forgo the license revenue it would have made from licenses and make it up, over time, with two-year support contracts, Schroer said. “It’s a very disruptive way to bring a product.

Source: CNET News


Written by syazli7

Fri, 19 Jan 2007 at 16:42:24 +0800

Posted in News

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