Archive of UserLand's first discussion group, started October 5, 1998.

Profits from GPLed software? Hardly.

Author:Brett Glass
Posted:8/23/2000; 7:29:39 PM
Topic:Next survey: Are you an open source developer?
Msg #:20047 (In response to 20043)
Prev/Next:20045 / 20048

Hehe. That's a good one. If I create software, I have the right to so as I please with it, no? So why won't you let me give it away?

...said Bill Gates, as he put Netscape out of business via predatory business practices.

Again, there is a right way and a wrong way to "give away" software. If you use the GPL, you are not truly giving it away, because programmers cannot use it freely. Rather, you are using it as a weapon.

As for Ars Digita: I am not familiar with the company's operations. However, if they work on GPLed code, they cannot have a sustainable business because anyone can sell copies of it for less or even give it away for free.

No, by their own choice they have decided to compete on a level playing field, for the betterment of all of society.

Actually, they are competing on a playing field in which no one can get to the goal. The GPL sets it up that way.

They've decided to give up their proprietary advantage and instead try to do the best they can by competing on the grounds of features, functionality and price.

They cannot compete on the basis of features, etc., because any of the others can use the same code. They can only compete on the efficiency with which they churn out plastic -- not exactly a high margin business. And none will make a dime as soon as fast Internet access is ubiquitous and no one buys discs.

Red Hat acknowledged this in their recent Form 10-Q, where they said: 

OUR BUSINESS MAY NOT SUCCEED BECAUSE OPEN SOURCE SOFTWARE BUSINESS MODELS ARE UNPROVEN 


We have not demonstrated the success of our open source business model, 
which gives our customers the right freely to copy and distribute our 
software. No other company has built a successful open source business. Few 
open source software products have gained widespread commercial acceptance 
partly due to the lack of viable open source industry participants to offer 
adequate service and support on a long term basis. In addition, open source 
vendors are not able to provide industry standard warranties and indemnities 
for their products, since these products have been developed largely by 
independent parties over whom open source vendors exercise no control or 
supervision. If open source software should fail to gain widespread commercial 
acceptance, we would not be able to sustain our revenue growth and our business
could fail.

What's more, due to the GPL, Red Hat does not even own its own products free and clear! In fact, it has virtually no assets. This doesn't paint a very promising picture.

What does Red Hat have to say about its prospects for making money in the future? Again, let's ask Red Hat what it thinks. From the same form: 

WE EXPECT TO INCUR SUBSTANTIAL LOSSES FOR THE FORESEEABLE FUTURE


We have incurred operating losses in four of our previous five fiscal years,
including our most recent fiscal year ended February 28, 1999, as well as in the
nine months ended November 30, 1999. We expect to incur significant losses for
the foreseeable future, as we substantially increase our sales and marketing,
research and development and administrative expenses. In addition, we are
investing considerable resources in our web initiatives and to expand our
professional services offerings. As a result, we cannot be certain when or if we
will achieve sustained profitability. Failure to become and remain profitable
may adversely affect the market price of our common stock and our ability to
raise capital and continue operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Overview", "--Results of
Operations" and "--Liquidity and Capital Resources".

None of this should be surprising. The purpose of the GPL is not to enable software businesses but to destroy them. This was its explicit intent, and this is what it's doing. Red Hat will not be profitable, because anyone can sell the same software and drive profits to zero. Hmmm. No assets and no profits? This does not seem like a promising situation for any business to be in.

--Brett Glass

There are responses to this message:

This page was archived on 6/13/2001; 4:56:12 PM.

© Copyright 1998-2001 UserLand Software, Inc.