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Open vs. Closed Source: There Really is No Competition

Is there really the level of competition in the open source world that we see in the closed source world? This is something that has been stuck in my mind lately as I have been told so many times by closed source developers that by opening the code you are creating your own competition. Today, I’m here to explore this theory and hopefully prove why it’s false.

With open source software, the business model is different from closed source. Take Songbird, for instance. Like iTunes, we have a music portal app that allows users to browse and listen to their music in a very innovative way. Unlike closed source alternatives, however, Songbird will play on all three major operating systems, in addition to letting the user browse embedded music on the artist’s site. Then throw in Firefox-like extensions for further user inspired customization and you have yourself a fantastic little media browser.

From there, plug these guys in with the changes seen happening at EMI (disappearing music DRM) and bundle the app with a decent music store and we could really start to see Songbird "sing" to a positive cash flow.

But considering that Songbird is still in the works, let's instead, examine a proven model that is shown to make more money that most could have ever imagine possible for a now Linux distribution based company.

Distro Selectors: How Accurate Are They?

This Open Source Project is Making a Bundle. On page four of this Inc. Magazine article from February 1 of this year, Mozilla was reported making roughly $70MM for 2006. And before I get into how they did it, let's examine that crazy structure they call a "non-profit" and how generating this sum becomes possible because of it.

Ask anyone with a clue and they will disclose that the only thing non-profit about Mozilla is their Federal fillings. Because Mozilla is a two headed beast - Mozilla Corp. and Mozilla Foundation - trying to determine whether or not they are to be considered a company becomes rather fuzzy. The easy way to look at it is though the non-profit eyes of the Mozilla Foundation, developer of Firefox, and the for-profit eyes of Mozilla Corp., the deal making machine that has signed on Google and Yahoo as its clients to pay for Mozilla Foundation. Tidy little arrangement, isn't it?

And even when some of you wish to exclaim that this is not that cut and dry, one thing that no one can argue is that their effort behind the notion that open source cannot be profitable.