It's raining penguins. Or rather, that's what many people would like you to think. Linux vendors are laying off scores of workers. Linux publications are folding. So is it doom and gloom time for Linux lovers?
Now might be a good time to take a step back and review the facts. Economically the industry, and the world as a whole, hasn't been doing too great lately. We're not shocked if GM, HP, or IBM lays off thousands of workers, so it should come as no surprise that Linux companies are tightening their belts too.
There also is the well known phenomenon that most new companies die within five years from a variety of ailments, including bad management, overexpansion, and competition. We know from the dot-coms that no one is immune. But regardless of the market segment, to last, a company needs a good product, a good marketing plan, and a good staff—not to mention timing and luck.
This is why I'm always amused by questions from those who are unfamiliar with a technology or market regarding the viability of new companies or even a particular approach. They tend to hear the hype and bad news and try to extrapolate how companies will do from that information.
In general, for Linux and open source, the basic question is how to earn money from it. The answer is to make people pay for something they want. The trick is to identify what you're going to sell and how it fits into an open-source context.
For example, Sleepycat Software (www.sleepycat.com) makes its Berkeley DB embedded database system available with the restriction that you can't redistribute it unless your application also is delivered via an open-source license. Sleepycat charges customers who don't meet that restriction, and plenty of customers pay.
Red Hat (www.redhat.com) with its Red Hat Linux has done a great job charging for tools and services. It has executed a smart business plan and has a smart team in place to complete the plan. The general direction of its stock price has followed the Nasdaq, so it's not completely out of whack with the tech sector.
Keep an eye out for sleepers. TimeSys Corp. (www.timesys.com) may not be on the top of peoples' lists for embedded Linux implementations, but its TimeSys Linux/Real-time and Reservation technologies offer features not found in many proprietary RTOSs. TimeSys delivers a GPL version of Linux with hooks that enable the two technologies just mentioned. The products are proprietary and licensed. Developers are quite willing to pay for these extras because of the benefits they provide, while open-source developers gain access to at least the basic improvements made to Linux.
These three companies aren't unique in the Linux space. They're in the black, along with many other companies selling Linux distributions and development tools.
Just because open-source licensing is involved in some part of a transaction doesn't mean that money can't be made and companies won't survive. In fact, quite the opposite is true. It just takes good business practices.
The trick to making money from open source is not wringing out every last penny from every user. That nonpaying consumer may eventually turn into a paying customer, or someone else may deliver a product the customer is willing to pay for based on your product. So don't be stingy.
As for the answer to the question posed in the headline, it's obviously a resounding no. In fact, the companies delivering products in this space aren't only surviving. They're growing.
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