February 16, 2019

From Contributors to Customers: How Open Source Projects Turn Into Successful Businesses - page 2

From Open Source Project to Business Model

  • September 26, 2005
  • By Maria Winslow

The contributor/early user community is clearly very important for the ongoing health of an open source project, but they don't buy. Creating a business requires understanding the market segment that will.

This means market research. According to Tara Spalding, Vice President of Marketing at SugarCRM, keeping up with industry news is the most important thing you can do to understand your market.

"Take time out from the code and examine the product space. Use Google alerts to make sure you don't miss important news that may relate to your project. Take thirty minutes each day to read about industry trends," Spalding said.

It doesn't take a lot of money to put together your market research if you're willing to invest a little time. Even the press releases for analyst reports and surveys can shed light on your market segment. Plucky startups use the resources already at hand.

Understanding the landscape of buyers and competitors in the marketplace is critical to creating products and services that will thrive. The cost of not taking the time to understand the market is likely to be failure. Some open source projects that have attempted the transition to profits have failed because they didn't know who their market really was. They never took the time to understand their potential customers. The most common mistake is to confuse early users with customers. They wonder why they aren't selling more to their "base," but a base of early adopters doesn't buy. Why buy if you have the ability and inclination to use a free version and support your own efforts?

A transition in thinking is necessary for projects that want to become successful businesses. The needs and expectations of paying users are different from those of the early-stage, non-paying users. Mitch Pirtle, CTO of JamboWorks, a services company formed to support Mambo/Joomla!, understands what paying customers need.

"Taking the commercial viewpoint, what we have available to JamboWorks is a very popular application that has also become a popular application framework--and that includes installers and a blossoming third party developer community. So there is plenty of work available integrating existing software, making customizations, and even providing new functionality," Pirtle explained.

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