Open source solutions need finely balanced ecosystems

open source solutions
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Open source solutions require an ecosystem that finds the right balance between being both genuinely open source and a sustainable business.

Data ownership and privacy are now big issues. It is not only relevant who keeps and owns the data, but also who manages software and owns intellectual property rights (IPRs) to process data. More competition is better to avoid the dominance of a few parties – and open source options are important for these purposes. However, open source is a complex area, and doesn’t offer miracle solutions. Sometimes it can only be a smokescreen.

Open source has been an important part of the software business over the last 30 years since the early days of Linux and MySQL. There have also been many startups that have built significant businesses on open source. However, there are also companies such as Docker that created a powerful open source solution but haven’t really been able to build a successful business on it.

Open source: lessons for the future

Combining an open source movement with good business is not simple. First of all, open source ‘activists’ are often motivated by other things than money. Some of them might even hate commercial businesses. Although a community typically develops open source, there can be very few people who can make decisions and basically manage the code basis.

Second, open source-based companies have an ongoing dilemma: which part of their offering should be released for free, and how can they make money from the rest? A simple answer has been to offer professional services and support for open source solutions. (Would it also be possible to run a service based on the open source code?) However, the challenge here is whether a company can offer enough value so that businesses and people are ready to pay for those support services, rather than just using the open source software however they like and dealing with problems themselves.

Some companies also want to offer a basic software version as open source and then provide more features and functionality in a commercial version. In this model, companies walk a very thin tightrope – if the free open source version doesn’t offer enough useful features, users won’t be interested in it; if it offers too much functionality, no one will bother buying the commercial version because the free version does everything they want.

Third, there is also a question of whether a company with an open source offering is really honestly providing open source, or whether it is just a marketing activity to get users, developers and partners to use its software and then try to trap them into paying for services or a better version. This practice especially comes to mind when big IT giants start to offer open source solutions. Meta (Facebook) managed to make its React open source community work, but Google’s AMP (Accelerated Mobile Pages) raised a lot of concerns because it was seen as an attempt to tie publishers to Google’s ecosystem.

What’s worse is that some startup founders have also figured out that open source stories can be a smokescreen to lure users and partners, as well as a compelling story to tell VCs. And in a way they’ve been right – for some investors, open source has been a magic word to get them excited.

At the same time, open source is an essential part of the software industry today, and many larger software companies are committed to it. Generally, we can simplify the situation to say that open source software is much better for developers and professional users than for consumers. Linux servers are used in many companies, but an ordinary PC user feels it is too complex to set up and maintain.

Open source and fair competition

Open source can play a critical role in avoiding the dominance of one single vendor, as well as vendor lock-in. But the reality is that an ecosystem typically also requires healthy business models – i.e., companies must also be able to make a sustainable business too. If it is just freeware, it works for some purposes, but it is not enough to develop a good ecosystem with products and solutions for different user needs.

It is also important to remember that no successful open source model can be based only on the offering of some loss-making VC-funded businesses. If you get open source and other free tools from startups that have raised a lot of funding, you must remember that sooner or later you will pay a high price for those services and solutions, or the company will disappear.

That’s why it is important that an open source ecosystem has a good combination of genuine open source activities and sustainable business models for every company in the ecosystem. The ecosystem must also attract different parties with promising business opportunities.

Open source components in the user-held data ecosystem

The above points are essential when considering user-held data models, where users can collect their own data and get applications they can use to run that data for their own purposes. It is hard to believe that only ideological projects that make all solutions and pledge to protect consumers will survive.

To be sure, some of these kinds of projects can work for some special users who don’t expect too much from the services, and there are some really ideological developers wjo are willing to offer those for free.

However, ordinary users expect high-quality tools. If your personal data app must compete with offerings from data giants that want to keep your data, the apps must be high quality and offer excellent user experiences. That’s why it is crucial to understand where open source can work and where commercial solutions are needed in the user-held data ecosystem.

User-held data solutions typically consist of many layers of activity:

  1. Data must be collected
  2. Typically, data must be pre-processed, cleaned and organized
  3. Data is enriched and offered to application developer interfaces
  4. Applications must actually run on the user’s side. 

If we look at the lessons that can be learned from other open source cases, they illustrate that it may be is easier to build open source at lower levels (e.g., create open source tools for data collection and pre-processing) than create open source solutions that are near to the end users.

We have seen many combinations of open source and commercial software for enterprise data. Successful enterprise data solutions are often based on active open source communities and successful commercial companies. We can expect to see the same development in the personal data market when individuals are better empowered to use their own data.

When we look at emerging user-held data ecosystems, it is worthwhile to look at their open source and commercial offering structures and balances too. The successful ecosystem will most probably be a combination of those. However, if the balance is skewed, then it’s fair to question whether it is a sustainable model. Active open source communities are often a requirement for ecosystems, but open source for its own sake very rarely offers good enough solutions for end-users.

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