I had a great lunch with associates from rSmart, Unicon, and MIT today at the JA-SIG Conference, and we talked about a vexing issue that plagues software, open source and proprietary alike (though it hurts the open source vendor more): the high cost of sales. (I credit John Lewis, Chief Software Architect, Unicon, for any intelligence in my musings, and take full blame for the inane shrapnel that is my personal contribution to the thread.)
The proprietary world's P&L operates much like the VC's: high, upfront return (license) to cover the expense that Purchasing puts vendors through to earn its business. (Repeat visits, RFPs, etc.) In other words, the proprietary vendor spends five figures on five deals to hopefully get a "home run" return on one of them to subsidize and exceed the costs.
Open source vendors operate differently, as Larry Augustin pointed out at OSBC. [PDF] Open source vendors are about volume in leads, with the leads finding their way back to the company to purchase. Four figures (or less, often) to close a deal, with the intention being that more deals within the pipe will close.… Read more