On September 13, 2006, Murugan Pal, co-founder and chief technology officer, at SpikeSource gave a talk in Mountain View, CA on open source business challenges.
Prior to SpikeSource, Pal was with venture capital firm Kleiner, Perkins, Caufield & Byer, and Asera, a business software company.
He observed that people do not want free software, but software at nominal costs. They want the freedom to switch solutions at anytime. Hosted models and aggregator models allow for no vendor lock-ins.
SpikeSource uses the aggregator model. He mentioned that an open source company survives when it is able to decrease its engineering costs. In order to do so, it must leverage its community. He gave the example of International Business Machines Corporation using developers to promote Java.
Another cost savings comes from sales and marketing. Open source is a low cost high volume business. The provider needs to be better not just less expensive than the brand name large competitor. The functionalities need to be three times better, and the costs one-third less. The customer requires a sales and marketing team in order to understand the technology. However, sales and marketing may be executed through means other than direct sales which may be expensive in terms of sales representative compensation.
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