Who Says You Can’t Make Money with Open Source?

This week yet another major global IT vendor will launch a product based on Linux – the HP Touchpad, which looks quite promising from early reviews. Even so, it is ironic that I still hear the following comment from a number of investors and business people:

“Open source is great, but you can’t make any money with it.”

While for some reason this sentiment has existed as long as open source software has been in existence, the facts don’t support it; in fact, the facts expose it to be a statement hovering between unbelievable and ridiculous. Red Hat will exceed $1 Billion dollars in revenue this year. Its investors have been richly rewarded over the past decade with more than an 8X return over the S&P 500.

Red Hat’s CEO, Jim Whitehurst, expects the company’s revenue to TRIPLE to three billion dollars in five years. This is a company whose only business is providing service and support for open source software.

IBM, on its 100th year in business, has been richly rewarded for its billion dollar investment in Linux with a market cap today that eclipsed Microsoft’s back in May. I would argue that IBM has created so much shareholder wealth largely because they got open source and they got it early. They built services and products around open source instead of competing with open source.

Can’t make money out of open source? Tell that to the investor who put $100k in Microsoft ten years ago. He would now have $69k. Compare that to the IBM investor who would be sitting on $143k made over the same period.

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About fblauer

Fred Blauer is a senior consultant with more than 20 years of experience providing information systems consulting, ERP implementation, syste
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