People have been confused about the economics of open source since they first heard of the concept of free software.
With a column called The Open Source, not a week goes by without someone asking me how anyone makes money when they give away the source code for their programs. Many high-profile representatives of the open-source, free software, Linux, and FreeBSD communities have addressed the economic issues in articles, debates, and keynote presentations better than I can within the space of this column. But I'll give it another shot.
Using open source to make money is a no-brainer. The vast majority of Internet sites, many of which are e-commerce sites, run on the open-source Apache Web server. Heck, the billion-dollar Web porn industry was built primarily on Linux and FreeBSD. I don't happen to approve of the porn industry, but those folks deserve credit for knowing something that should have been obvious to the rest of the business world: You can make more profits on products and services based on open-source software than commercial software.
Two simple reasons are license fees and control. I'm not just talking about per-user licenses of desktops. It's cheaper to build and sell a computing appliance based on open-source software because you pay others less for every unit you sell. And when your product becomes a smash hit, no one demands a bigger cut per unit if you want to license the latest version of the software.
But control is where it really counts. When you have the source, you control your own destiny. The argument that companies need commercial software for the commercial-grade support doesn't wash. Plenty of organizations are willing to sell you support contracts for open-source products.
What most scoffers really mean is that they want to buy from a software company they can hold legally responsible if their business loses money when the software breaks. Let's revisit that issue the day after someone wins a multimillion dollar lawsuit against Microsoft Corp. because their e-commerce site went down due to needless vulnerabilities in IIS to the Code Red worms.
But what baffles some folks most is what motivates people to write code only to give it away for free? Paul Ferris, formerly with the Webzine Linux Today, argues that many folks simply want to be part of a charitable community (see www.varlinux.org/article.php?sid=294), and he's right. But I think most people who think software has to be proprietary to be worth writing simply can't see past store shelves. To them I ask, Outside of any questionable productivity gains, has your company made a single penny on the custom workflow application your IT department wrote? No? And you mean to tell me your company actually paid programmers to write this software?
For whatever reason, people write open-source, free software. If you can't write it, enjoy it and don't worry about what motivates others.