Paul Sterne

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Top Stories by Paul Sterne

The open source movement is something completely new. It doesn't fit neatly into any accepted economic or business theory. For that reason a lot of traditional thinkers, e.g., economists, business people, and investors, are struggling to figure out what it means. Is it the beginning of a new economic order or is it a flash in the pan? The idea that 400,000 software programmers around the world contribute their knowledge and energy for free doesn't make sense to people schooled in Milton Friedman and Karl Marx. Traditional thinkers keep coming back to the same question: "How do these people expect to make a living?" It's a very legitimate question, one that all of us have pondered at one time or another. Is the open source movement a quaint romantic notion that will fade as it grows old? Is it the high-tech version of the Summer of Love? Are the SuSe Linuxs of the wo... (more)

The Business of Open Source

In the beginning, the 800-pound gorilla of online industry was Prodigy, Inc. This joint venture between IBM and Sears Roebuck boasted 2.5 million subscribers in 1993, the year before Netscape broke open the Internet. From the very beginning Prodigy was out-marketed by AOL. AOL boasted a number of important unique selling propositions (USPs) like personalized user IDs, chat, and a slicker graphical user interface. But most importantly, AOL put itself forward as the force of online purity, the opponent of crass commercialization, and promised to protect users from the aggravation o... (more)

Enterprise Open Source Conversion Model Explored!

The central issue in any Open Source business model is how to convert software that is free on the Internet into revenue that can be booked under US GAAP, hence the term invented by some clever person, "Conversion Model." The issue boils down to how to convert the free stuff developed by volunteers into cash? Linus Torvald invented the first conversion model. By owning the Linux trademark, he has maintained control of brand and parleyed that control into worldwide celebrity. Celebrities make money in lots of ways - when you become a celebrity they will let you in on their secret... (more)

The Open Source Venture Capital Universe

A rollercoaster - as trite as that image may be - is the right analogy for venture capital investing in open source companies. And what a long, strange trip it's been. Starting in the mid '90s, a few brave pioneers like Benchmark invested in an open alternative to proprietary software and made a fortune. By the end of the decade, everyone wanted a piece of the action. A second wave of VCs rushed in at ridiculous valuations and got their clocks cleaned. In 1999 and 2000, over-capitalized, over-valued open source companies burnt through hundreds of millions of dollars. Shame on th... (more)

SugarCRM - A Sweet Mix of Commercial and Open Source

I've always wondered where the word "oxymoron" came from. What does "oxy" have to do with "moron"? What about the words "commercial" and "open source"; do these words form an oxymoron when combined in one phrase? The open source-based CRM software maker, SugarCRM, has successfully combined these polar opposites and implemented such a "commercial open source" business model. SugarCRM has taken its business model to a new level in that they have combined an enterprise server software sales model with that of a software-as-a-service model. Of course, SugarCRM offers its software for ... (more)