Eight Ways VARs Can Profit From Linux And Open Source
As we approach next week’s LinuxWorld Expo, The VAR Guy was reminded of an age-old problem. During a meeting earlier this week in New Orleans, a solution provider told The VAR Guy he just didn’t understand how to profit from open source. Didn’t we put this issue to rest a long time ago? Perhaps not. Here are eight ways VARs can profit from Linux and Open Source.
First, don’t “sell” Linux. People don’t buy operating systems. They buy applications and services. Selling a Linux file server? Yawn. What are you, a NetWare holdout sent to us from the 1990s? Building Linux white boxes? Leave the PC market to true Linux experts like System76 and ZaReason.
Instead, get your arms around one or more of these open source solutions. Are all of these solutions rock-solid? Perhaps not, concedes The VAR Guy. But the companies mentioned below are working hard to get VARs and solutions providers up to speed on their technologies:
- An ERP solution: There are numerous components from which to choose, including Openbravo or Compiere (for ERP), MySQL or EnterpriseDB (for databases) and Linux (or Windows Server, if you’re stubborn).
- A CRM solution: Leverage options like SugarCRM or Concursive, plus a database and Linux or Windows Server.
- A point-of-sale solution: Leverage open source solutions like Openbravo POS.
- A collaborative software solution: A lot of companies — large and small — are embracing Zimbra email, and there’s plenty of buzz around Open Xchange.
- Security and Network Administration Solutions: Here, Untangle and GroundWork Open Source come to mind.
- VoIP and Unified Communications: Chances are, you’ve heard about Asterisk, the open source PBX. Digium leads that market, but there are plenty of other companies to check out. Fonality, for one, has attracted Dell’s attention. Oh, and The VAR Guy wrote a bit about Voiceroute, a unified communications specialist, earlier this month.
- Managed Services: Here again, Untangle is promoting a partner program. And VARs are generating recurring monthly revenue from managed open source technologies.
- Software as a Service: This is the big one. Why — oh why — would a VAR resell Microsoft’s new software+service offerings and make pennies on the dollar? Instead, dive into the open source market and host your own applications. SugarCRM estimates that 30 percent of their new business involves SaaS deployments, which means more and more companies are moving away from on-premise projects.
Open source plus SaaS is the perfect storm for VARs. But for some strange reason, most VARs have yet to head into the eye of this storm. Perhaps that will start to change at LinuxWorld Expo.
There are dozens of ways VARs can profit from open source. The VAR Guy didn’t even mention options like middleware (Red Hat’s JBoss) and mobile solutions. But then again, most VARs are too busy reselling Microsoft’s technology.
I’m curious to see how Sun evolves its partner program to reflect MySQL acquisition. Have you heard anything?
I agree with all 8 ways VARs can profit from linux and open source platforms. VARs should take advantage of the open source platforms to build their end product based on these platforms.
but there are SOOO many more.
Everyone is selling virtualization solutions – sell management of those solutions using a NON-intrusive tool like the Platespin offerings.
or supplement your vmware practice by going after the customers who balk at the high vmware prices by using XEN.
Partner with a SAP provider to offer creative services that save $100’s of thousands of $$$ by using SLES for SAP.
There are so many options…a little creativity could generate a ton of revenue.
I thought the whole point of a VAR was you made your money “adding value” to someone else’s software.
So you make money from FLOSS the same way you make it from MS – get hold of some software, get hold of some clients, put the two together and make it work.
Except that, if you’re a FLOSS VAR, you get to keep rather more of the value-add for yourself rather than bleeding it back to your software suppliers (or, hopefully, you bleed it back to FLOSS by supporting the coders or codebase).
Cheers,
Wol
JP: No doubt, virtualization and SuSE Linux/SAP combo are opportunities. Do you represent Novell?
Wol: The VAR Guy also failed to mention that “localizing” software is a big opportunity. Most open source companies don’t have the time/money/resources to localize their products for specific region. That’s where VARs can add a lot of value.
@the var guy Not representing Novell in those statements. I just see what can work and picked what I know.
Unfortunately, a large number of VARs never get out of the rut the other guy created and continue to sell pieces and parts that they are asked to sell instead of creating value.
Sales pukes look for $$ and if the solution has a “free” moniker they run. The just don’t know what they don’t know and they never will.
Thank you, VAR Guy, I hope seeing this in print will help those who have trouble understanding these simple concepts. Unfortunately, I’m not too sure it will. I have offered some of these same explanations to those who ask the question, “But how does anyone make money with Open Source?” Sadly, after offering the expositions, replete with copious examples, the usual response is, “Okay, great. But how does anyone make money with Open Source?” I begin to wonder if a description of counterfeiting techniques wouldn’t be more apropos to settling the question.
Rambo: “Seeing this in print” — well, digital print at least! The VAR Guy went green and abandoned true print media products a year or two ago (though he used to be a magazine editor…).
Now, he saves trees by saving paper … but burns oil by keeping this web site humming along in a data center.
TheVarGuy keeps forgetting about Vyatta! 🙂 Amazing things are happening with the progress of their open source network software.
Other ways to make money include selling Zmanda backup, and Virtual Iron (based on Xen and Suse) as an alternative to VMware ESX.
Tristan
Your link to SugarCRM is messed up. You linked to a commercial portal (suRgarcrm.com) instead of the real website (sugarcrm.com).
Sephi: Thanks; link fixed
Tristan @10: Vyatta? Hmmm. The VAR Guy will need to check that out. But he did recently blog about Zmanda backup. So our resident blogger isn’t completely clueless … just a little.
I’d be interested to know what percentage of “commercial open source start-ups” are making decent revenue off of their OWN installed base? Quite a few popular open source project founders seem to have flailed when trying to set up shop as a vendor selling support / subscription packages on top of that open source.
And those commercial open source start-ups (where the original founder of the open source is active / present) have some obvious advantages over other VARs / solution providers when competing for revenue off that installed base. Specifically, a lot more leverage amp; control around things like: (obviously) feature definition / “core” development; the mailing lists / correspondences with user base (“marketing”); documentation; etc.
VARs / Solution providers on the other hand might have better inroads to revenue (with an open source community) via their experience with IT in specific vertical markets, their experience with other technologies in their customers’ environments, existing customers NOT yet using that open source technology. But they also are going to find that a lot of open source users bristle up pretty quickly when approached by a commercial entity and asked to consider buying anything.
I wonder how many VARs and solution providers are out there waiting on the sidelines for better evidence of revenue opportunities around certain open source technologies they are evaluating.
Open source offers some tremendous advantages, and it’s a no-brainer why users go for it. But the idea that a large base of users automatically translates into revenue is the same type of irrational exuberance that was happening around building “communities” in the dotcom bust. This business of converting open source users into paying customers seems extremely complicated, with few sure fire formulas. For every RedHat / MySQL – there are many commercial open source startups that do not appear to be heading towards prosperous futures. Not saying open source is any more dangerous than proprietary for VARs – but certainly different.
I appreciate the post is focused on pure open source, but of course most IT environments are a mix of open source and proprietary solutions. You need to think about these “mixed source” environments.
For example, there’s plenty of opportunities around selling (and implementing and supporting) traditional proprietary applications on Linux – while giving customers many of the same benefits around TCO, security, flexibility and vendor independence usually associated with all open source solutions. Open source does not have to be an all or nothing proposition – for most customers the pragmatic solution is a mixed source solution. You can mix and match open source amp; proprietary applications with open source amp; proprietary OS’s. There’s plenty of market opportunity for VARs around mixed source solution stacks and plenty of benefit to your customers as well.
Thanks for the post! — Ian Bruce/Novell.
Ian: The VAR Guy completely agrees. In fact, he moderated a range of CIO events focused on Novell SuSE/Oracle solutions. Your thought on Mixed Source is right on. Other examples include a range of open source applications running on Windows Server.
Regardless of what U’re selling, U have to keep in mind that U’re selling a *solution* to a *problem*, not ‘open source’ or ‘commercial/proprietary’ software. Do the latter (i.e., forget your customer’s problem), and U’ll find yourself broke.
Using open source is a great way to solve problems, because the licensing is simple, and the overhead can be quite low. One of the best aspects is that U can get other folks to solve your problems for free; of course, it’s on their schedule, not yours, so take that into account when U’re developing your product. It also really *really* helps to know what U’re selling; it’s best if U’ve actually used the product. And if U’re not a programmer, it doesn’t hurt to get in contact with somebody who can muddle around in the code a bit; check out sourceware.org, which can hook U up with one.
About the only thing that’s truly different when U’re selling an open-source product is that it’s more friendly to the little guy – so long as U’re not afraid to get your hands dirty.
There are VARs doing it successfully, take for example 01.com, that offers Zimbra hosting, since you mention the hosted, saas model, although they also help orgs to deploy themselves… another VAR that seems to be making $$ from open source is Optaros, the only sugarCRM gold partner in North America. The key seems to be a dedicated support model… you’re not selling open source per se, you’re selling service, technical acumen, and leveraging open source to do it less expensively…
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