a trap or the best marketing strategy for an IT product?
Giving something for free and thereby getting people hooked on your product has always been one of the best promotion strategies. Bill Gates may have thought the same way, possibly deliberately supplying “pirated” copies of his products to Russia. In 1996, the famous Gorbushka got into the Guinness Book of Records for the achievement in the field of “Fastest piracy”. Bill Gates announced the start of sales of the “Office 97” package at a price of $495 per copy. Just 4 hours later, “Office 97” was sold on Gorbushka at a price of just under $5 for the same copy. 25 years later, we want “free” no less. There is no free software in the corporate IT market, but there is the well-known Open Source. How profitable it is for the developers themselves, we will figure out in this article.
Let's get straight to the point: if you're considering whether or not to open source your product, know that Open Source is not a magic tool that automatically leads you to success. But sometimes it works, and I'll try to explain why and when.
Open source can be both a powerful engine for growth and a real trap for those hoping for quick success. Among my friends and colleagues from the entrepreneurial community, from ARPP (Association of Software Product Developers), regulars of Oleg Bunin's conferences (HighLoad, DevOpsConf and others), there are many who have chosen this approach in their business and there are no fewer contradictions than questions. Open Source is not a panacea, and you need to choose it understanding what risks it carries for business.
When we started to enter the international market with our monitoring product Monk, I was lucky to meet and talk to Alexey Vladyshev (the founder of Zabbix), and I learned a lot about the spirit and principles of free software. I also remember our conversation with Matvey Kukuy. He is one of the Russian founders who created a product for managing monitoring alerts Amixr, then sold it to Grafana Labs, after which the Grafana On-call product was the leader for several years. When we were thinking about joining the Cloud Native Computing Foundation (CNCF) and placing it on their map, we talked to their consultants and discussed in what form we could join, including the possibility of our entry into Open Source. In this article, I will try to express my opinion on this issue and it will be useful to those who are building their product and are worried about its fate.
Disclaimer: I will not discuss which open source license you should choose and the differences between licenses, there is a lot of information on this topic. We will discuss the issues of choosing a business model, taking into account our realities in the country.
What is Open Source?
Open Source (free or open source software) — is software whose source code is available for free use, modification and distribution in accordance with the selected Open Source license. This approach is very different from traditional closed (proprietary or on-premis) software, where the source code is protected by copyright and its modification is possible only by the copyright holder (unless otherwise permitted by the copyright holder to a third party).
It all started with Richard Stallman, who launched the GNU Project (which stands for “GNU's Not Unix!”) in 1983 and founded the “free software” movement. Stallman was unhappy with how closed source code was limiting his opportunities at MIT when Symbolics began to privatize the work he had helped do. Stallman wanted to “liberate” the code and make it available to everyone so that anyone could modify and redistribute it. In 1985, he founded the Free Software Foundation (FSF) and created the first GPL (General Public License) to protect the rights of developers and users.
When the idea of ”freedom” reached businessmen, they realized that free code could be used to capture the market. In 1998, Eric Raymond and Bruce Perens took the concept of “free software” and renamed it to a more “beautiful” and business-friendly form – “open source”. Why? Because the word “free” scares investors and businessmen, as it is associated with something free, and “open source” sounds like a strategic decision on which you can make big money.
Such different Open Source
When it comes to Open Source, it is important to understand that there are two different approaches: community-driven projects and vendor-driven Open Source solutions. And the difference between them is huge.
1. Community Open Source projectssuch as Linux, are developed and supported by a large community of developers and enthusiasts. The main advantage here is decentralization and freedom. All code is open source, and its development depends on the joint contribution of all interested participants. Such projects offer flexibility and innovation, but often suffer from the lack of unified control and a clear development strategy. Most of such projects die and are left without support, another, smaller part turns into a business (vendor Open Source), and only a few remain independent for many years.
2. Vendor Open Source, like Zabbix or Grafanais a completely different approach. Such projects, although they use open source code, are controlled by commercial companies. They focus on developing and promoting the product as a key asset of their business. The code may be open, but the main decisions are made within the company, which allows them to adapt to market changes faster, offer professional support and additional commercial services. Here, Open Source is a tool for conquering the market, reducing entry barriers and promoting the product, i.e. a marketing strategy.
Different Open Source Business Models
When it comes to building a successful product, choosing a business model is critical. Open source can serve a variety of purposes, from bringing attention to your project to creating an entire ecosystem for monetization. Let's look at some popular business models and how they compare to pure open source.
Dual Licensing
A model in which a product is released under two different licenses: one Open Source and one Commercial. Users can use the product for free under the terms of the Open Source license, but companies or users who want to use the product in conditions incompatible with the Open Source license (for example, in closed systems) can purchase a Commercial license.
Advantages:
Accessibility for the community: Support the community and attract developers through open access.
Monetization: Opportunity to generate revenue from commercial customers who require additional features or support.
Example:
MySQL: Uses dual licensing, allowing you to use the software for free and open source, or purchase a commercial license for use on proprietary systems.
Open Core
A model in which the core product is open source, but additional features or enhanced versions of the product are offered as a commercial extension. The basic version of the product is free to use and modify, while premium features such as extended support, additional modules, or enhanced capabilities are available for a fee.
Advantages:
Attracting users: Free access to basic functionality attracts a wide range of users.
Revenue from premium features: Monetization through paid extensions or services.
Example:
Elastic (Elasticsearch): The basic version of Elasticsearch is available as Open Source, but additional features and support are offered in the paid version of Elastic Stack.
Support and Services
This model focuses on providing commercial support and services for Open Source products. The software itself may be free, but the company makes money by providing professional support, consulting, and training. Users can use the product for free, but to get help, training, integration, or other services, they pay for professional support.
Advantages:
Free product: Availability of the product for users who want to use it on their own.
Income from services: Opportunity to generate income through the provision of professional services.
Example:
Red Hat: Provides support and services for Red Hat Enterprise Linux, while the Fedora distribution remains available as Open Source.
Zabbix: The product is completely free and open source, but you have to pay for training, certification, and support.
Open Source as Marketing
Often companies open source their small products as a kind of “Trojan horse”. This approach allows them to gain the trust of the community in order to then offer large and expensive solutions. This is a classic marketing ploy: a company releases a useful free tool and then starts promoting its paid product. For example, HashiCorp with Vagrant or Elastic with Elasticsearch. At first, we use their free versions, and then, when the need for more functionality grows, we have to pay for premium solutions.
Did you know that one of the largest and most capitalist-minded companies, IBM, made a move at the turn of the 2000s that at first glance seems strange for a corporation of its size? I'm talking about IBM's $1 billion investment in Linux and Open Source. And if anyone thinks they've suddenly become idealists, the reality, as always, is more cynical.
IBM was already feeling uncomfortable in the software market at that point. Microsoft had monopolized desktop systems, and IBM needed to do something to regain influence, especially in the server and enterprise segments. Linux was perfect for this purpose – cheap, open, and capable of customization for any needs. IBM became the main sponsor of Open Source for a reason: supporting Linux gave them the opportunity to sell expensive support and integration services without sharing revenue with Microsoft or other giants.
In the end, their “investment in freedom” strengthened IBM's position in the server market and allowed them to push aside their competitors. Well, let's face it: even when Western corporations talk about freedom and openness, they are actually talking about profit and monetization. But that doesn't surprise anyone anymore, right?
Open Source has quickly become a marketing tool that allows companies to capture the market. With its help, a company can also reduce development costs, find bugs faster and create an ecosystem around its product. Most importantly, the Open Source strategy removes the issue of trust in the product. Since the source code is open, “I can always compile it myself, change it, no one will say that your license has expired, I can always check the code itself.” And then, when users get used to the product and start demanding support and additional features, you can offer paid versions, corporate licenses or related services, such as customization or paid consulting.
Look at it this way: open source has become a way to increase capitalization. The more community, stars on GigHub, the more likely it is that big companies will want to buy or use this software, and investors will offer more money in the next round. If earlier it was about freedom and democratization of technology, now it is more about the strategy of market dominance and corporate interest.
Open Source is very expensive
Using an Open Source strategy for a commercial company without venture capital is like trying to win a marathon without training and preparation. Open Source projects require huge resources: for development, support, promotion, creation and maintenance of a community. Without external capital, the chances of success are greatly reduced. The main goal of the Open Source strategy is to quickly capture the market and create a powerful ecosystem of users and developers, which will attract investment or acquisition by large players. But without venture capital, you will not have the time and resources to attract a sufficient number of users and developers, which makes growth extremely slow and risky.
Historically, most successful open source companies emerged in the West: Red Hat, MongoDB, Elastic, Docker, Grafana. Why? Because in the US and Europe there is access to investments that are willing to suffer losses for many years for the prospect of capturing the market. In Russia, it doesn't work that way: neither investors nor banks are willing to wait until your free toy suddenly starts making money.
In addition, in the West you quickly find users willing to pay for support, customization or additional features. We have a problem with this. Often, companies themselves do not understand how much they spend on Open Source. IT directors may think that the same Zabbix is free, but they may not know how many man-days are spent on its configuration, support, connecting Grafana, storage and other customizations, and simple IT monitoring can cost more than 6-10 man-months.
Risks of Using Open Source in Russia
Open Source has always been about freedom, but recently this concept has acquired an interesting connotation. Many people like to talk about “freedom of code”, but few realize what exactly this freedom means for Russian companies today.
After the events in Ukraine, several Open Source projects took and made edits to their repositories in order to deliberately damage the systems of Russian users. For example, the project node-ipc in march 2022 received an “update” in which the code deleted files on Russian users' computers. Quietly, under the guise of a patriotic act. The result was a bunch of destroyed infrastructure projects, lost data, missed opportunities, and hundreds of hours of recovery.
The es5-ext project, used to provide backward compatibility in browsers, was also the target of a sabotage attack. The developer made code changes that caused endless system reboots and crashes in Russian companies using the library. The code changes were hidden in “updates,” which came as an unpleasant surprise to users and again highlighted the potential risks of Open Source.
GitHub, the largest platform for hosting Open Source projects, began blocking accounts and restricting access for users from Russia, especially if the accounts were connected to government organizations or large companies. For example, in April 2022, Sber and Alfa-Bank lost their accounts, as well as a number of independent developers.
Although there have been no direct attacks, some major open source projects, such as OpenSSL, have discussed the possibility of discontinuing support or restricting access for Russian users. If such measures were implemented, it would create serious problems for companies using these solutions in their products, as they would be left without critical security updates.
These incidents have shown that Open Source not only brings opportunities for innovation and collaboration, but also poses serious risks in an unstable geopolitical situation. When developers start changing code for political purposes, it becomes a real problem for the companies that depend on these decisions. This highlights the need to carefully assess all dependencies and be prepared for potential threats from the Open Source ecosystem.
By the way, I recently came across open basewhich was created by the Russian community, where packages that distribute malware and calls are collected. There are currently 34 objects in the database. 28 of which appeared in 2022, 6 in 2023 and none were registered in 2024. In this database, you can also see who left Russia, who came to their senses and returned. I recommend watching it.
For these reasons, among other reasons, government agencies and businesses are prohibited in some places, and strongly discouraged in others, from using Open Source components, especially those located in repositories from unfriendly countries.
When is it worth opening your code?
Short answer: only if you are Yandex or VK. Who will pay for your development when you don't have paying customers yet? Either a corporation or venture investors.
The venture market in Russia has shrunk fivefold since 2022, and investments in new startups have shrunk even more. Legislative and political risks are too high. The departure of Western companies from Russia has exposed the key shortcoming of software — dependence on external repositories and support. In addition, Russia has little experience and culture of Open Source monetization: few managers and entrepreneurs understand how to make money on customization or paid modules. We do not have this culture, and the main corporate players work in the Vendor-Distributor-Partner-Client channel, and there is no place for Open Source.
Let's be honest – starting an open source project on a bootstrap, when you only have your own money or a small stash for the first time, is like going to war with a knife against tanks. Theoretically possible, but only if you are a crazy genius or just damn lucky. Most of those who take on this quickly find themselves mired in a swamp: there is an idea, there is a product, but no money. And when money appears, it is barely enough to support the development.
Open Source Examples from Russia
But there are also extremely successful examples of open source projects from Russia. Let's take, for example, Tarantool. This project from Mail.ru (now VK) managed to find its niche. Tarantool turned out to be very popular in high-load systems that require real-time data processing. I like the approach here: Mail.ru immediately positioned Tarantool as a flexible solution for developers, and in the end the project turned out to be quite successful due to its focus and community support. Or take ClickHouse from Yandex. This database management system was developed with a specific purpose — to process large volumes of data with high performance. Thanks to the open source model, ClickHouse has gained recognition all over the world. I know that companies like Uber and Cloudflare use it (we use it ourselves). Their solution worked at the intersection of market needs and real technological uniqueness, which allowed it to occupy its niche and attract many supporters among developers.
Compare this to projects that failed to take off. I remember there was RedDatabase (formerly FirebirdSQL) and it was once a promising project, but over time it lost popularity. This is not only an example of how a lack of marketing and funding can kill a project, but also how open source can be overshadowed by competitors like PostgreSQL or MySQL. I have a feeling that they did not have enough time and funding to find the right positioning and attract the right community.
Those who think that it is enough to simply open the code and “they will come themselves” are deeply mistaken. If the project is not supported by a sufficient number of active developers and early users, it does not have a clear development plan, then it will quickly lose relevance and sink into oblivion. I personally saw how even promising initiatives sank into obscurity precisely because of the lack of support and visibility in the market.
Another “successful” project stands out NGINX. It is used by millions of servers around the world. But who knows that its creator, Igor Sysoev, did not initially plan any monetization? This community itself began to use and improve the product, and the business model caught up later. By the way, after 15 years of success, NGINX was sold for $670 million. But how many were there who tried similar models and failed? Not to mention the ugly conflict with Rambler for the source code of the balancer.
The Future of Open Source
In the new world, open source will become increasingly complex and localized. On the one hand, countries and companies want independence from the West and will develop their own products. On the other hand, this means that we will get many “national” versions of software that will not be able to compete on the global stage and live in their local repositories.
Now imagine that you are a company developing a product and you decide to open source it. By whose rules and in what jurisdiction will you work? The time when you could sit on two chairs is over. You need to decide which market you are working for. If it is the Western market, then sooner or later you will have to leave the Russian market, and if it is the Russian market, then you will not be used in the Western markets.
What approach did we take for Monq and why?
When we decided to choose a promotional strategy for our enterprise application and infrastructure monitoring product Monq, we faced a dilemma: go the Open Source route or create proprietary software? And although we ideologically support the spirit of open source and love all its values - openness, collaboration and innovation – we had to admit that it was not a good fit for us from a purely economic standpoint.
We decided to bet on strategy Freemium proprietary product. We offer our product for free to small teams and individual users, providing fairly broad usage limits. This allows people to try our product, understand its functionality, and understand that we are not hiding anything. But at the same time, we do not disclose the entire source code of the product – only small libraries.
Why did we choose this path? First of all, opening the entire code would require huge resources to support and develop the project. Open Source as a strategy requires not only developers, but also the creation of a strong community that will support and develop the project. And this means significant investment of time and money. We cannot afford this approach, since it will bring more expenses than income in the first 2-3 years. In addition, in the Russian market, monitoring can be promoted “from below” through engineers, or “from above” through business. Our engineers are well versed in Western Open Source software, such as Zabbix, Grafana, Prometheus, ELK, and we simply cannot compete with this software, it would require multi-million dollar marketing costs, even in Russia. And “from above” sales are conducted through partner integrators who are not interested in selling Open Source.
We, on the other hand, have decided to make a more flexible strategy. We are opening up parts of our product to give people useful libraries. We offer free use for small teams, but our core product remains closed. This allows us to maintain control over development while using the free elements as a marketing strategy. And for us, this is the optimal solution in the current conditions.
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