Chris Lynch at CIO traces IBM's and The New York Times' trajectories to reach the same conclusion: free is a winning business model. In the case of IBM, it launched its Symphony office suite product last week, portending a dramatic shift in how enterprises buy and consume software:
In offering Symphony for free, IBM basically acknowledges that the monetization of software by vendors must change since we now live in a world where the Web has become people's IT department. New technology providers...have been effective at offering applications for free on the Web. They make their money later on by offering a spiced up, or even an enterprise worthy, version of the software for a modest fee. If it's purely consumer-based, they also can subsidize their experience with ads.
But this is only part of the benefit, as the article goes on to note. Giving software away also helps to ensure that more people will review, use and comment on the software, giving the vendor a better, more diffuse feedback loop than the traditional model: getting a few of its biggest customers in a room to ask them how to make the software stink less.
These are glaringly obvious truths, depending on where you sit. Free as in price and free as in freedom is a better business model, though it will take time to make this evident to all.
But even if it's obvious, that doesn't make it easier to implement if a vendor's current model depends on hefty up-front license fees or a lack of transparency in communication. I feel for such vendors. It's hard to be stuck in a world that has passed you by.
Some vendors, and particularly IBM, have proved adept at playing on both sides of "free." IBM is remarkably intelligent about how it engages free and open-source software. It's not perfect by any stretch, but it offers a good example for would-be freedom lovers among the old guard of software. It doesn't hurt that it made a shift to more services revenue a long time ago, but it still exemplifies sage strategy vis-a-vis open source.
For other vendors out there, I can only feel pity. But since it's the customer, and not legacy profits for vendors, that matters, I'm afraid that I and my open-source and Web 2.0 cohorts are resigned to putting the old world out of business. Sorry.