The last classification analysed is interesting because it provides empirical data on real companies that currently focus their business model on free software. However, like Hecker, Daffara proposes a characterisation in isolation, rather than a taxonomy. We now propose a schema of our own to sort and incorporate the ideas we have analysed thus far, classifying the models by the degree to which their revenue is derived from the intellectual property rights over the software and by the extent to which they focus on the provision of products or services:
Our classification, like that of other authors, is based on source of revenue. Nonetheless, besides considering how the different companies recover their investment in free software development, it is also important to analyse how they exploit the advantages that a free development model can offer.
Business models are also characterised by their source of revenue, by the market they are aimed at, how they develop and market their products, and by how they relate to the competition. Hence, there is a cross-cutting issue affecting any business model that becomes particularly relevant with the use of free software: the concept of coopetition.
Coopetition
Among the other features differentiating free and proprietary software is the fact that the use of free software can enhance the quality of the services offered, thus helping to remove barriers to entry and sketching out a scenario of increased competition and effort for differentiation and specialisation, besides a distinct, open, cooperative competition in which companies will need to cooperate as well as compete if they wish to prosper. This business concept, which in some ways is replacing that of "winner takes all" in the context of a new network economy, is called coopetition.
Coopetition: cooperation between competing companies to seek win-win scenarios, either to enhance the value of the product or to expand the market.
Recommended website
For more information, see:
Henry Chesbrough; Wim Vanhaverbeke; Joel West. "Open Innovation: researching a new paradigm"
http://www.openinnovation.net/Book/NewParadigm/Chapters/index.html
In this context, companies need to carefully examine their economic ecosystem – clients, providers, competitors and complementers – implementing strategies for the creation of new alliances and rethinking their traditional associations.
This concept is not unique to free software and has extended to other areas. Companies in the same industry can collaborate with one another to expand their markets, competing later when it comes to segmenting them.
Intelwill invest considerable sums in expanding the microprocessor market, even though part of this investment will directly benefit its competitor, AMD. In this case, given Intel's dominant position, the percentage of its investment that will benefit others will be quite low.
Although coopetition is not exclusive to free software, it is highly significant in open-source development scenarios. It is inevitable that the competition will benefit from our investment, so it is necessary to find ways to turn this apparent disadvantage into a business advantage. Moreover, incorporating the users (clients) into the development process, involving them and encouraging their participation as allies, is also a feature of the free software development model.
To a large extent, the use of free software will also limit the possibility of becoming a monopoly and provide an anti-captivity guarantee. Again, a key question for any company becomes especially relevant in free software scenarios: how can we create value for a client while at the same time extracting some of this value for the company?