RE: Charging the Charger

On Tue, 17 May 2005, Anderson, Kelly wrote:
> I beg to differ... but just a little bit. Proprietary software does
> enjoy AN advantage when it comes to support. And that is that the
> licensing fees from selling the software can initially bootstrap the
> support organization. There is no such source of bootstrapping capital
> for a support organization to support, say Open Office, other than
> perhaps by going public as RedHat did, or doing a round of VC funding.
> In either case, it's much more difficult to have a pure support
> organization.

But the licensing fees don't start rolling in until there's a product 
built, marketed, and sold - so what bootstraps that?

It seems to me that companies intending to provide support for existing 
Open Source software have a lower barrier to market entry than companies 
intending to sell licensing contracts and support for products yet to be 
built.  I can incorporate a new company on day one, and on day two start 
selling support contracts for OSS products I and my co-founders are 
familiar with, without spending for much more than the cost of a web site 
and phone number.  Selling support contracts does not require a big team, 
even for 24/7 coverage - I could start with just 2-3 people and just a 
handful of customers to get to breakeven, and then hire up as my customer 
base grows. Whereas, developing a substantial software product requires a 
non-trivial team (a couple of dozen, if you include QA, docs/packaging, 
product management, and competitive marketing), and pure speculation that 
you'll get to a sustainable level of sales.

 	Brian