More software companies embracing the open source model

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Open-source software -- code that is available for use or modification at no charge -- is growing in popularity among software companies. IBM, Sun Microsystems and other big names in the software niche all have some sort of open-source product offering. Even Microsoft has adopted some open-source elements. One company, Aras, will be releasing the code for its design application, which was written exclusively with Microsoft technology and will be hosted on the software giant's CodePlex code-sharing site. Aras' code makes up a product lifecycle management program, and is designed to structure the service and design of manufactured products.

Since open-source code is given away for free, the monetary return of open-source content comes from charging for technical and other support, software updates or a more feature-intensive, upgraded version of the free software.

But open-source content is not just another, more popular way to make money. It is also a way to get your product noticed when it ordinarily would just be one of many. PLM programs such as Aras' are usually quite costly, but the company hopes the gamble of giving the content away for free will allow them to break into a market that is currently dominated by big names such as Dassault Systemes and Parametric Technology. Irish company Iona Technologies has recently been facing financial difficulties, but the company hopes that its implementation of some open-source elements will show it can keep up with industry trends and give it visibility, although the move has not brought in any money just yet.

Not all companies subscribe to open-source content 100 percent like Aras does. Some companies pick and choose the aspects of open-source that work best for them. OpenMFG regularly gets requests from venture capitalists to offer 100 percent open-source content, but the company has not seen any reason to yet. Their customers are not clamoring for it and the current hybrid model -- some is open-source content, some is closed-source -- is working for them. Also, OpenMFG CEO Ned Lilly said in a C-Net interview that many companies make the mistake of using open-source to bring back programs that didn't sell in the past. He said that, when the programs fail again, companies would think that open source didn't work instead of looking to traditional problems such as program errors or insufficient customer support.

According to a C-Net interview with analyst Raven Zachary of the 451 Group, the long-term financial success of open-source products is not yet certain, but the software market's interest in the content is strong, and it hadn't failed a business yet.

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