Friday, February 03, 2006
Free Software strategies
The issue of companies distributing products for free looms large in the software industry. I looked yesterday at all the companies distributing BitTorrent technology freely, and today I see an announcement from VMWare , who are going to freely distribute one of their operating systems for free with an eye to charging for some of their premium brands. The aim, seemingly, is first to capture the target market, and then to make revenue from customers who like what they see and want more from the product.
People are very used now to free software. Because of this situation in the market (and because of the ready availability/ability of vendors to produce software for free) there is a competitive push to make at least some of the technology available for free on the net, and then to start looking for revenue later. The apparent dynamic in the industry is first to capture the market, then to start making money from this market. Without the capture phase in place as a precondition, little or no revenue is possible.
This even seems to work at an individual programmer level: the unemployed or student programmer, or the hobbyist, who wants to make his name in the industry is encouraged to take this exact same approach as a means of generating future wealth. The big companies can often find themselves competing directly with talented single individuals who are out purely to make a name for themselves. Again, this is a dynamic much less prevalent in the classic business model of traditional product delivery. Software companies need to defend themselves from the unlikeliest of competitors.
People are very used now to free software. Because of this situation in the market (and because of the ready availability/ability of vendors to produce software for free) there is a competitive push to make at least some of the technology available for free on the net, and then to start looking for revenue later. The apparent dynamic in the industry is first to capture the market, then to start making money from this market. Without the capture phase in place as a precondition, little or no revenue is possible.
This even seems to work at an individual programmer level: the unemployed or student programmer, or the hobbyist, who wants to make his name in the industry is encouraged to take this exact same approach as a means of generating future wealth. The big companies can often find themselves competing directly with talented single individuals who are out purely to make a name for themselves. Again, this is a dynamic much less prevalent in the classic business model of traditional product delivery. Software companies need to defend themselves from the unlikeliest of competitors.
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