Tuesday, May 3, 2011

The Cloud is the New Path to Open Source Monetization

To date there have been several ways to monetize open source projects:
- Don't. Just donate your time and code.
- Sugardaddy. Get a job at a big company that embeds your open source project in other products that make money.
- Services. Do consulting or training.
- "Pro" version. This is where most of the scalable open source businesses have gone like Red Hat, MySQL, JBoss, Spring, etc. This is typically some combination of support, packaging of bits, and enhanced features like the Red Hat or JBoss Network.

For those open source projects looking to expand, there was often frustration that only a few percent of the users who were all gaining value form the project would actually pay anything. This has limited growth. Look at RedHat being a $1B company and VMWare being a $2B+ (much younger) company. The reason is quite simple - there are free ways to get Red Hat's technology and you have to pay VMWare to get their technology.

Well, the Cloud has opened up a new avenue to monetize your open source project. When you offer your open source project as a hosted service, people are willing to pay you for that service. SauceLabs offering of Selenium is a great example of this.

This is one of the key strategies behind CloudBees. Not only are we offering a variety of open source projects like Jenkins, Maven and Git as cloud services, we are opening up our platform for other open source projects to also run in the Cloud.

Today, we announced our first open source cloud partner, Sonar. SonarSource is the company behind the leading open source project for doing code coverage analysis. The Cloud is a perfect deployment environment for this type of technology - where code analysis is done in bursts that may be quite resource intensive. So the pay-for-use model and no administrative and capital costs of the cloud is quite compelling.

CloudBees is greatly easing Sonar's transition to the Cloud. Our platform gives the project multi-tenancy and billing capabilities. In addition, many of our Jenkins-in-the-cloud users make use of Sonar and the integrated Sonar plug-in.

To be sure, the Cloud is not an instant path to monetization. Users have to migrate over according to their project schedules and hardware refresh cycles. For Jenkins, we have seen a powerful interest in Cloud deployment. Our customers April usage was double March (although still on relatively small numbers of about 1,500 users. However, if this growth continues over the next year it will produce a nice revenue stream - certainly int he neighborhood of the early JBoss days of selling training and documentation and a bit of phone support.

Here is a video demo.

We welcome other open source projects to engage with us. We have also just announced a free cloud development service for any open source project.

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