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.comment: Making Money on Free Software?
Is anybody actually doing it?
November 29, 2000
On the ride to Washington for Thanksgiving, my wife and I were amused by the fact that my company (which comprises: me) has actually made money from Linux. I write books about it, the occasional article, this column. These things cost me less to do than I am paid to do them. Ergo, I make money from Linux.
Which caused me to wonder if maybe I'm turning more profit from Linux than is, say, Red Hat Software, which, when it posts earnings next month, is expected to lose 2 cents per share, according to the analysts. So I did some research. Other publicly traded Linux companies, VA Linux and Caldera, are not listed among earnings estimates (they're relatively new to the scene), and Corel counts Linux as but a small part of its business and suffers afflictions that would skew the figure anyway.
I ended up with no evidence that any of the Linux companies that are publicly traded is turning a nickel's profit. The non-public companies I've talked with are facing hard times as well. One or two are just about out of money, with not much coming in. There may be some others--companies that resell books and T-shirts and distributions at discount--who are doing okay.
When I've interviewed people with companies that propose to make money from free software, I've always asked them how they plan to bring this about. Some, such as the highly motivated theKompany.com, say up front that they're selling the box and the book. Some say that they plan to offer value-added services--for instance, Helixcode hopes to become what amounts to a content provider, though they plan to do it seamlessly.
The Linux distributors, who sell the CDs plus the box and the book, themselves have hit a wall because you can purchase the distribution on CD for a couple of bucks, or download it, and buy a better book about it somewhere else. So they're trying other things as well. Caldera is, for instance, aiming for the enterprise and has done a great deal of work to make its distribution attractive to the business (which isn't all that likely to shop around for a $2 copy of a distribution and no technical support). Red Hat is banking--or, rather, hoping to bank--on the Red Hat Network.
VA Linux, like others, hopes hardware that works with Linux and preloads that are nicely tuned to that hardware will lead the company to profits.
All of which is small comfort to those who have invested in these companies.