Open Source Business Models Research Articles

Opening the source code: The threat of forking

<p style='text-indent:20px;'>Making software open source can have substantial positive effects on the quality and diffusion of a software and strengthen the sales of complementary products. However, it is a large concern of firms that a competitor might use the very same source code to start its own competitive project, a so-called fork. This paper analyzes whether the threat of forking prevents a firm to open its source code. We consider three different regimes: In the first regime a firm develops and sells software under a proprietary license, in the second regime, it uses an open source business model. The third regime is characterized by the competition of two related open source projects. The switching times between the regimes are optimally determined. We find that the optimal strategy substantially depends on the initial state value and the extent to which a competitor can make use of the firm's software quality. A small initial software quality can prevent a firm to open the code when it cannot afford competition, only with a competitive advantage open source is attractive then. For a large initial software quality, a firm would never open the code immediately, it would either wait or keep it proprietary forever.</p>

Economic analysis of sector coupling business models: Application on green hydrogen use cases

Sector coupling will play a key role in the future energy system to realise greenhouse gas emission reductions. A major factor will be green hydrogen based on renewable energies to defossilise consumption sectors. Related business models of power to gas are not yet implemented on the market. However, given the urgency of the change, this is essential.This paper investigates hydrogen business models under current market conditions of high power prices, no existing market for green hydrogen and the given regulatory framework with no levies for green hydrogen production in the German market. For this purpose, an open-source business model evaluation tool for sector coupling, which enables a simple and generic evaluation of sector coupling business models including production and possible transportation infrastructure, is developed and applied. Furthermore, the impact of changes of the input parameters like power prices and the influence of regulatory changes on profitability are assessed.The results show that X-to-power business cases can be already profitable due to high power prices on the wholesale market. However, power-to-X business models like hydrogen production still have negative net present values and the net present value is worsened when infrastructure for hydrogen transportation is considered. Key parameters for the negative result are investment costs and low hydrogen prices. Nevertheless, it must be considered that higher hydrogen prices have a negative impact on the X-to-power business model. To allow for profitable business cases, the market conditions need to be adjusted to ensure sufficiently high prices for green hydrogen. Furthermore, subsidies on investment or operational and maintenance costs can support the integration of power-to-X into the market. Transportation infrastructure has a significant impact on profitability. Given these facts, it is necessary to create the required framework conditions to ensure the realisation of sector coupling.

Archetypes of open-source business models

The open-source paradigm offers a plethora of opportunities for innovative business models (BMs) as the underlying codebase of the technology is accessible and extendable by external developers. However, finding the proper configuration of open-source business models (OSBMs) is challenging, as existing literature gives guidance through commonly used BMs but does not describe underlying design elements. The present study generates a taxonomy following an iterative development process based on established guidelines by analyzing 120 OSBMs to complement the taxonomy's conceptually-grounded design elements. Then, a cluster-based approach is used to develop archetypes derived from dominant features. The results show that OSBMs can be classified into seven archetypical patterns: open-source platform BM, funding-based BM, infrastructure BM, Open Innovation BM, Open Core BM, proprietary-like BM, and traditional open-source software (OSS) BM. The results can act as a starting point for further investigation regarding the use of the open-source paradigm in the era of digital entrepreneurship. Practitioners can find guidance in designing OSBMs.

On the use of emerging decentralised technologies for supporting software factories coopetition

Besides the recent adoption of outsourcing and open source business models, software factory is still a centralised process. In spite of the advantages of centralisation, it is widely accepted that decentralised systems are better alternatives; i.e., they are more scalable and reliable and more suitable for market sharing. The implementation of decentralised software factories demands solution of several technical challenges that conventional technology cannot solve. Emerging decentralised technologies (e.g., blockchain and smart contracts) can help to solve these challenges. Decentralised technologies are only emerging, consequently, their potential use to support software factories is a new research avenue. To cast some light on this emerging topic, in this article we provide an analysis of some centralised and decentralised architectures and raise research questions that need attention from the perspective of architecture selection. To frame the discussion, we focus our attention on software architectures for Model Driven Engineering, Asset Specifications and Integration Tools, resulting in a characterisation and analysis of possibilities for implementation of heterogeneous blockchain-oriented repositories.

The Open Source Distributor Business Model

This article defines and discusses one particular commercial open source business model, called the (open source) distributor model. It can attract significant venture capital, thereby contributing to the long-term sustainability of open source.

An open-source molecular diagnostic platform approach for outbreak and epidemic preparedness.

BackgroundDiagnostic development for outbreak pathogens has typically followed a disease-specific reactive rather than proactive response. Given the diversity of outbreak pathogens, particularly those prioritised by the World Health Organization Research and Development Blueprint, a more flexible and proactive approach to epidemic preparedness is needed to expand access to critical molecular diagnostic tests in peripheral and resource-constrained deployment settings.ObjectiveNew and more sustainable directives are needed to spur the development of high-quality products, particularly for epidemics more often found in low- and middle-income countries. To leverage and de-risk the development process, we present the benefits and challenges of an open-source business model for co-development of molecular diagnostic tests for decentralised settings.MethodsWe identify key outbreak pathogens that are available only for testing in high infrastructure laboratories and compare in-country installed base platforms that could be leveraged for menu expansion. Key strengths and challenges for development are highlighted for both platform and assay developers, with discussion of how to leverage and de-risk the process through an open-source development model.ResultsDepending on the specific partner strengths, options for partnership roles are presented. The proposed open-source business model addresses the particular challenges in the detection of outbreak- and epidemic-prone pathogens in low- and middle-income countries, reduces development and deployment risks to support outbreak response, strengthens diagnostic capacity and creates a viable market for product developers.ConclusionWe hope this model for a collaborative and open-source approach for molecular diagnostics serves to encourage stakeholders to consider co-development partnerships to improve outbreak preparedness and epidemic/pandemic response.

Can a technology turn (also) into a symbol The 3D printers case

The 3D printing industry has been recently affected by two events: the fact that open source (OS) business models are getting momentum, and the widespread diffusion of the Maker Movement. We argue that 3D printers can be conceptualised as innovations which embody both technological and symbolic aspects. If innovations of the first type are solely adopted for their technical utility, innovations which have also symbolic connotation may confer a new social meaning to an item. By analysing an international sample of 3D printer users, we highlight that adoption of 3D proprietary printers are driven by technologically-rooted considerations, while adherence to the Maker Movement is a key factor behind the adoption of 3D OS printers.

Overcoming cultural resistance to open source innovation

Purpose This article offers insight on how to effectively help incumbent organizations prepare for global business shifts to open source and digital business models. Design/methodology/approach Discussion related to observation, experience and case studies related to incumbent organizations and their efforts to adopt open source models and business tools. Findings Companies that let their old culture reject the new risk becoming obsolete if doing so inhibits their rethinking of their future using powerful tools like crowdsourcing, blockchain, customer experience-based connections, integrating workflows with artificial intelligence (AI), automated technologies and digital business platforms. These new ways of working affect how and where work is done, access to information, an organization’s capacity for work and its efficiency. As important as technological proficiency is, managing the cultural shift required to embrace transformative industry architecture – the key to innovating new business models – may be the bigger challenge. Research limitations/implications Findings are based on original research and case studies. Insights are theoretically, based on additional study, interviews, and research, but need to be tested through additional case studies. Practical implications The goal is to make the transition more productive and less traumatic for incumbent firms by providing a language and tested methods to help senior leaders use innovative technologies to build on their core even as they explore new business models. Social implications This article provides insights that will lead to more effective ideas for helping organizations adapt. Originality/value This article is based on original research and case experience. That research and experience has then been analyzed and viewed through the lens of models that have been known to work. The result is original insights and findings that can be applied in new ways to further adoption within incumbent organizations.

Keeping the doctor in the loop: Ayurvedic pharmaceuticals in Kerala

ABSTRACTEthnographic inquiry into Ayurvedic commodification in Kerala revealed the prevalence of a distinct regional pharmaceutical market dominated by physician-manufacturers, oriented towards supplying classical medicines to Ayurvedic doctors. This stands in sharp contrast to mainstream Ayurveda that is observed to have undergone biomedicalization and pharmaceuticalization. This paper argues that Kerala's classical-medicine-centric pharmaceutical market constitutes an alternative modernity because it provided Kerala Ayurveda with a different route to modernization impervious to the biomedical regime, as well as endowing it with the institutional power to safeguard its regional identity. Although physician-entrepreneurs are its key architects, it is sustained by value regimes shaped by a unique regional medico-cultural milieu. Even when industrially produced, classical medicines remain embedded within Ayurveda's socio-technical network; unlike proprietary drugs sold as individual product-identities through non-Ayurvedic channels, they travel together as a pharmacopeia, distributed through exclusive doctor-mediated agencies. This clinic-centric distribution format is best conceptualized as an open-source business model as it made low-margin generics viable by packaging them with therapies and services. Besides ensuring better access and affordability, it provided resistance to pharmaceuticalization and intellectual property concentration. By keeping the doctor in the loop, it prevented medicines from degenerating into de-contextualized commodities; the service component of Ayurveda therein preserved went on become the unique selling point in the health-tourism market. The tourism-inspired proliferation of Brand Kerala eventually triggered a paradigm shift in mainstream Ayurveda – shifting focus from ‘pharmaceuticals’ to ‘services’ and from ‘illness’ to ‘wellness’. Furthermore, interacting with hybrid Ayurvedas in transnational markets, Kerala Ayurveda co-produces new alterities countervailing the structurally dominant biomedical paradigm.

From Technological to Symbolic Innovation? Open Source, Maker Movement and Global Demand for 3D Printers

The recent turbulent evolution of the 3D printing industry is strictly related with two important phenomena: the widespread adoption of Open Source business models by new companies on the one hand, and the increasing importance of communities of users, such as the so-called Maker Movement, on the other. This study analyzes the factors that drive the adoption of different types of 3D printers and argues that, in order to understand adoption patterns, 3D printers should be considered as both technological and symbolic innovations, according to the classification originally introduced by Hirschman (1982). While technological innovations are adopted for their technical utility, the adoption of symbolic product innovations serves mainly to communicate a novel social meaning to a specific pre-existing product. The recent growth of communities of interest like the Maker Movement, that strongly endorse the Open Source philosophy, has led Open Source 3D printers to gain many of the features of symbolic innovations. Taking advantage of an international sample of 3D printer users from 39 different countries the study shows empirically that while the high-quality 3D printers of established producers (3D proprietary printers) are mainly adopted for technologically-driven reasons, the adherence to the Maker Movement and to its ethical values is the main reason behind the adoption of 3D printers by new producers adopting Open Source business models (3D OS printers). Moreover this is especially true for the users that started to use 3D printers after 2011, when the Maker philosophy became predominant. The findings show that the global demand for 3D printer is increasingly fragmented between users driven by different motivations in their adoption choices. Moreover the analysis suggests that the novel symbolic nature of 3D OS printers should be explicitly acknowledged by producers willing to gain market shares in the industry.

An open source business model for malaria.

Greater investment is required in developing new drugs and vaccines against malaria in order to eradicate malaria. These precious funds must be carefully managed to achieve the greatest impact. We evaluate existing efforts to discover and develop new drugs and vaccines for malaria to determine how best malaria R&D can benefit from an enhanced open source approach and how such a business model may operate. We assess research articles, patents, clinical trials and conducted a smaller survey among malaria researchers. Our results demonstrate that the public and philanthropic sectors are financing and performing the majority of malaria drug/vaccine discovery and development, but are then restricting access through patents, ‘closed’ publications and hidden away physical specimens. This makes little sense since it is also the public and philanthropic sector that purchases the drugs and vaccines. We recommend that a more “open source” approach is taken by making the entire value chain more efficient through greater transparency which may lead to more extensive collaborations. This can, for example, be achieved by empowering an existing organization like the Medicines for Malaria Venture (MMV) to act as a clearing house for malaria-related data. The malaria researchers that we surveyed indicated that they would utilize such registry data to increase collaboration. Finally, we question the utility of publicly or philanthropically funded patents for malaria medicines, where little to no profits are available. Malaria R&D benefits from a publicly and philanthropically funded architecture, which starts with academic research institutions, product development partnerships, commercialization assistance through UNITAID and finally procurement through mechanisms like The Global Fund to Fight AIDS, Tuberculosis and Malaria and the U.S.’ President’s Malaria Initiative. We believe that a fresh look should be taken at the cost/benefit of patents particularly related to new malaria medicines and consider alternative incentives, like WHO prequalification.

When to make proprietary software open source

Software can be distributed closed source (proprietary) or open source (developed collaboratively). While a firm cannot sell open source software, and so loses potential sales revenue, the open source software development process can have a substantial positive impact on the quality of a software, its diffusion, and, consequently, the demand for a complementary product from which the firm does profit. Previous papers have considered the firm's option to release software under a closed or open source license as a simple once and for all binary choice. We extend this research by allowing for the possibility of keeping software proprietary for some optimally determined finite time period before making it open source. Furthermore, we study the impact of switching costs.We show that in case of high in-house R&D costs, the firm always makes the software open source at some point (unless switching itself is too expensive). The timing, however, depends on the initial software quality. On the other hand, when R&D is inexpensive, the firm opens the source code only when the initial level of software quality is low. For intermediate R&D costs, the firm might have the choice between opening the code immediately, opening it at some subsequent and optimally determined time, or keeping it closed forever. Finally we find that whereas high switching costs might prevent firms from adopting an open source business model, low switching costs mainly affect the timing of the opening of the source code.

The Future Prospects for Open Source Business Models In the World of Electric Vehicles

In recent years, a series of incidents have drawn society’s attention to issues of environmental awareness and energy security. As a result, electric vehicles (hereafter, “EV”) are attracting attention around the world. To stimulate their economies, countries are preparing measures and policies to acquire EV-related core technologies and develop new markets quickly. In this paper, we argue that, given these circumstances, the development of open source businesses in the EV industry will contribute to solving a wide variety of problems, from industry-specific to social issues. Furthermore, we advance the hypothesis that this strategy may prove to be a model both sustainable and profitable. We qualitatively evaluate the utility of our hypothesis on the basis of the SIM-Drive Corporation’s actual performance, which has been promoting a similar business model in the EV industry.

Erratum to: The single-vendor commercial open source business model

Erratum to: The single-vendor commercial open source business model

Guest Editors' Introduction: Successful Software Product Line Practices

A software product line is a set of software-intensive systems sharing a common, managed set of features that satisfy the specific needs of a particular market segment or mission and that are developed from a common set of core assets in a prescribed way in place. Organizations adopting product development strategies that include a software product line have achieved impressive results, reducing product cycle time and increasing productivity by an order of magnitude. The software product line strategy is a blend of business and technical actions that lets an organization satisfy a wide range of customers, gain leverage with suppliers, meet the threats of substitute products, and deter other companies seeking to enter the market. The strategy is robust over a wide range of technologies, domains, and organizations of different structures, cultures, and goals. Service-oriented architectures, agile development methods, and open source business models have all played roles in successful product line organizations.

Open source software: emerging business models

Several small and large firms have devised business models and strategies to use open source software (OSS) gainfully. However, despite the increasing popularity and success of some OSS, there is very little academic literature that provides clarity and guidance on developing business models with OSS. This paper contributes to the existing knowledge by critically analysing the various open source business models and then building a set of business models that encompass the current trends in this field. The models presented are supported by descriptions of organisations that have used them successfully.

Valuing Patents for Licensing: A Practical Survey of the Literature

A number of methods exist for valuing a patent in order to license it to an external party. Several of these methods are well accepted in academic circles, others are merely tolerated as expedient. None of the existing methods, however, appears poised to easily accommodate software patent valuation in the face of open source software. Open source software distributors do not earn revenues directly from licensing source code. Even forprofit open source enterprises, such as Red Hat, provide software as part of a service bundle, not as an individually priced product. The problem of linking a patent to a stream of revenue generated by a bundle of goods holds for many service-oriented businesses, with open source as an extreme case. The increasing prevalence of service-based business models suggests that new thinking about how to put a price on patented innovations may be required. In addition to the basic problem of placing a dollar value on an innovation, new thinking on the incentives at play in license negotiations may also be necessary. In other words, do any unique principal-agent problems between patent holder and licensee surface as a result of the open source business model‘ Do any other licensing structure issues need to be worked through in order for existing theory to fit an open source environment. Before any of this 'new thinking' can begin (or is even warranted), though, an assessment of the current state of art is in order. This paper reviews the academic literature on valuing patent licenses.

Show me the money: the business models of Linux players

The major trends characterising the development of e-business platforms include increasing the performance-to-price ratio of hardware components (e.g., servers and chips), as well as the declining costs of operating systems and middleware software as organisations switch from expensive proprietary software (e.g., Microsoft Windows) to open source software (e.g., Linux). The unique origins of Linux and open source software require the adoption of new business models to allow key players to sustain themselves long-term. Using a historical review of the open software movement and a value chain analysis for the open software industry, we examine, using primary data from interviews, the business models of five Linux players (Red Hat, Novell, Navica, Open Country and SohoLaunch). Case analyses enable us to identify four open source business models that should be sustainable in the long run.

Comparing motivations of individual programmers and firms to take part in the open source movement: From community to business

The first urgent question for any scholar willing to study the Open Source (OS) movement has been clearly put by Glass (1999, 104): I don’t know who these crazy people are who want to write, read and even revise all that code without being paid anything for it at all. A growing body of economic literature has been addressing the motivations at the basis of the participation in the OS movement since when the new paradigm has become successful and triggered the entrance on the market of firms offering Open Source based products and services (Open Source firms). However, most of the empirical analyses focus on individual developers and neglect companies that adopt Open Source business models. This paper contributes to the literature by providing empirical evidence on the incentives of the firms that engage in OS activities. Findings on firms’ motivations are compared

Transparency and Access to Source Code in E-Voting

We examine the potential role of source code disclosure and open source code requirements in promoting technical improvements and increasing transparency of voting systems. We describe the enclosure of transparency of voting technology that has occurred over the course of United States' electoral history, the implications that source code disclosure has for transparency, the negative effects that enclosing transparency has had at different levels and the regulatory and legislative efforts to increase access to source code. We then look at the benefits and risks of open and disclosed source code regimes for voting systems, efforts to provide open source voting systems, existing open source business models that might translate to the voting systems context, regulatory and market barriers to disclosed or open source code in voting systems and alternatives that might exist outside of public disclosure of source code. We conclude that disclosure of full system source code to qualified individuals will promote technical improvements in voting systems while limiting some of the potential risks associated with full public disclosure.