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How do companies that provide free (as in beer) software make money? I'm thinking of things like Linux distros, as some even provide free overseas shipping!

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Open source only means free based on your definition of free. –  Falmarri Oct 20 '10 at 20:03
    
Falmarri is right. There is 'open source software' and there is 'free software'. Free is used here as in: 'free speech'. They overlap but have subtle differences. Wikipedia's article on open source explains the differences. –  wzzrd Oct 20 '10 at 20:12
    
I tried to fix your question to remove the confusion between free-as-in-speech and free-as-in-beer and ended up just eliminating most of it and just leaving the actual question; hopefully you're ok with that –  Michael Mrozek Oct 20 '10 at 20:23
    
Is this really on-topic here? –  Jonas Oct 20 '10 at 23:57
    
@michael- thanks @jonas- the topic here is to-get-things-cleared ! –  Ayush Goyal Oct 21 '10 at 3:32
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2 Answers 2

up vote 17 down vote accepted

Red Hat is worth over a billion dollars these days. Yes, they make money. By doing consulting, offering support, providing training etc.

That said, there's not a lot of open source companies that actually make money. Canonical certainly doesn't (yet). Novell is in a patch of bad weather. Mandriva is always in a patch of bad weather. Zarafa is relatively new and small.

On the other hand, ask yourself whether there needs to be a single company offering something. Companies like IBM, Oracle, Red Hat, Novell, Intel, AMD, Fujitsu, Dell, HP, QLogic and a whole lot of others work together on the kernel. They do not all make money solely on 'selling' that kernel or support to it, but they sure as hell make money.

The difference between (companies like) Microsoft and (companies like) Novell or Red Hat is that the latter are able to provide value on top of a commodity, whereas (companies like) Microsoft can only make money by making sure that what they are selling never becomes a commodity. That's why Microsoft is scared shitless about open standards. Same goes for Apple. Open standards are not cool if your business is to tie people to your product. Open standards are very cool if you can provide something (support, consulting) on top of an open, standardized commodity platform.

That is how it works :)

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I would compare some of the benefit of open source to, say, reducing the cost of gasoline: with gas, a result would be more people driving more cars more places. With operating systems, the result is more people writing more software and running more servers and cell phones and so on. The net result may be that less money is spent on operating systems, overall, but nobody's end goal is jacking up the costs. (Except maybe the legion of dead UNIX companies...) –  Kevin Cantu Dec 8 '10 at 2:52
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In short, distro's like Ubuntu make money by providing companies 24/7 support packages.

So now the money that usually spent on software can now go for the guy keeping the software running... which in this case is Canonical...

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Which is Red Hat or Novell or Canonical or some other company, actually. Let's not mindlessly hail Canonical as the single one open source promoter. Much as they have done for Linux, they are still dwarfed, on all counts, by Novell, Red Hat, IBM and a whole bunch more. –  wzzrd Oct 20 '10 at 20:10
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@wzzrd, i meant for this specific case study :) –  Stefan Oct 21 '10 at 8:56
    
@wzzrd Dwarfed on all counts? Does all include number of users? –  Tshepang Dec 4 '10 at 19:11
    
@Tshepang, I hope you do not actually believe that the amount of Ubuntu installs outnumbers Red Hat installs? I don't know where you have been the last couple of years, but where Canonical (I like them, don't get me wrong), still struggles to make money, Red Hat is actually a billion dollar company these days. Admittedly, I like Red Hat even better than Canonical, both professionally and personally. –  wzzrd Dec 4 '10 at 20:14
    
@wzz I don't have links, but I saw somewhere that Ubuntu and Linux Mint are the most popular distros out there. And I thought popularity translates into user numbers. –  Tshepang Dec 4 '10 at 20:22
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