• Wed. Jun 7th, 2023

Where’s the Cash? Possibilities for Commercializing Technologies, Element 1: Open Supply Software program – Tech & Sourcing @ Morgan Lewis


May 26, 2023

When the subject of technologies commercialization tactics comes up, the most typical alternatives ordinarily pointed out incorporate the sale of a technologies or creating a small business about technologies by promoting solutions or offering licenses or subscriptions to technologies-primarily based options.

In this series, we will appear at technologies commercialization alternatives that are much less normally discussed. In Element 1, we go over how corporations may well be capable to use open supply computer software (OSS) as a commercialization technique. In a forthcoming Element two, we will concentrate on the selection to “white label” technologies as a commercialization technique.

WHY OPEN Supply?

We have highlighted troubles connected to OSS in a quantity of weblog posts: we spoke about trends in leveraging OSS, as nicely as troubles to contemplate in the context of representations and warranties in M&ampA transactions. Our colleagues also discussed small business dangers linked with the use of OSS.

In this post, nevertheless, we turn our concentrate to why a small business may well pick out to pursue an open supply technique and how companies may well nonetheless get industrial advantage from OSS.
The central thought of OSS is to leverage the breadth and depth of the developer neighborhood, which assists in identifying and eliminating bugs and safety troubles, as nicely as enhancing computer software characteristics and user expertise primarily based on user feedback.

This remains the core advantage of OSS-primarily based companies: as demonstrated by a RedHat report on the state of enterprise open supply, 89% of respondents saw enterprise open supply as much more safe or as safe as proprietary computer software. On the other hand, open supply corporations have also proved that they can be lucrative companies, and a couple of current initial public offerings in the sector prove as considerably.


Ahead of we appear into how OSS owners can make cash, it is worth mentioning that the industrial results of OSS is largely attributable to (i) the scale of interest in the item from each the developer neighborhood and buyers in order to use the core advantage of open supply as highlighted above and (ii) the credibility and reputation of the OSS owner, as cybersecurity troubles are typically major priority for buyers. Now, let’s turn to the alternatives.

Open But Not Absolutely free

Though OSS is typically perceived as a totally free computer software, that is not necessarily the case. The creator may well publish the supply code below a license that would limit the use and modification rights or impose an earnings-sharing obligation on the licensee if a item embedding the computer software is commercialized, which incentivizes possible industrial customers to enter into a separate industrial license with the creator.

This selection is also named restrictive licensing and has been criticized by the open supply neighborhood as departing from the original intent of OSS. Note that converting to a restrictive license right after a item was initially marketed without the need of any restrictions may well not be nicely received by customers (see our coverage of the Dungeons and Dragons case earlier this year).

Absolutely free vs. Paid Versions

This selection is occasionally named dual licensing, as the computer software owner may well let totally free use of the computer software with fundamental alternatives but will charge a charge for the versions that incorporate more functionality or are intended particularly for enterprise use. This pricing technique is occasionally named “freemium.”

Open Core

A variation of the dual licensing model is identified as the “open core” model. In the open core model, the developer open-sources the majority of the code and permits it to create as an ordinary OSS, but keeps specific characteristics and functionality proprietary and readily available for industrial licensing.

For instance, envision a browser or mobile operating method that comes with a marketplace of add-ons and extensions made by the owner as nicely as independent developers, exactly where some of these add-ons and extensions are readily available for a charge.


Mainly because not all companies have the required capacity to deploy and run OSS, some vendors may well pick out to give a remote server to run the OSS with added functionality such as backups and upgrades of the OSS.

On the other hand, provided that remote servers usually are the territory of cloud vendors, there may well be competitors amongst OSS developers and cloud vendors providing OSS as a service without the need of additional expense to the consumer. This competitors has resulted in some OSS providers which includes limitations in their licenses to avoid promoting their computer software as a service without the need of paying royalties.

Assistance and Consulting

OSS creators may well use their knowledge and give buyers paid help in relation to OSS deployment, configuration, integration, education, or troubleshooting. There are distinctive views as to whether or not this is a sustainable operational model extended term, as several would claim that OSS need to boost more than time, and buyers will not be inclined to continue paying right after the initial deployment stage. As a outcome, some providers pick out to use this function collectively with proprietary characteristics compatible with OSS or with open core.

In addition to the above, there are much more techniques to raise cash, such as certification charges, crowdsourcing, branded distribution, or hybrid licensing, e.g., a so-named franchising model exactly where the OSS owner certifies chosen partners to turn into “authorized” vendors of the OSS and they use 1 of the commercialization tactics and spend a charge to the OSS owner.

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