Gartner questions the novelty of the open-core biz model
Gartner's Brian Prentice calls out "open-core businesses" as... ...software vendors.
"Let’s keep in mind that when we start talking about business models, what matters is not how a vendor generates incremental revenue but how you generate incremental value. In order to understand whether that’s going to happen or not we should start with the foundation of the open-core model – the distinction between a full-feature proprietary version and a free, open-source functional subset of that offering.
[...] That’s called “freemium” in the consumer world. In the corporate market, attempting to broaden the appeal of a software solution by parring back the functional footprint into a low cost alternative has been a staple mid-market strategy of enterprise software companies for over a decade. [...] By and large, organizations want products that represent a nuanced understanding of their needs rather than a product manager’s arbitrary functional pruning process.
And arbitrary is the operative word. A couple of years ago I looked at a number of open-core providers and found that none of them had a consistent decision framework in place nor any publicly available covenants that explain to potential users the criteria they use in determining which new capabilities will be made available only in their commercial version. [...] The minute you require a feature only available in the full version then the entirety of your commitment needs to be scaled up and re-costed to the full-cost offering. [...] This is where the hype starts to creep in. The idea that a functionally complete, proprietary solution is somehow unique because it was built atop an open source base fails to recognize the fact that many proprietary solutions are being built using open source components."
Read the full post at:
gartner.com/brian_prentice >> open-core-the-emperors-new-clothes
