Ingres' New CFO Is Out for Enterprise Blood
In the cost of building a software company, probably 35 percent is attributable to R&D, and the rest is sales and marketing and going GA and the rest of the stuff.The open-source model, with a community of developers, can significantly cut back on some 35 to 40 percent of the costs of development.
Further, the community contributes ideas to take the product in areas you otherwise wouldn't have come across.
Of course, the negative is that dollars coming in on a per-unit basis are lower, so you need more users paying a small amount, vs. the enterprise model of few users paying a large amount.
Some insight into the different economics of an open source software start-up, courtesy Ingres' incoming CFO (currently an analyst at Citi).
The point is that if you can establish a community of developers and imbue the project with enough momentum, the cost of delivery can be significantly lower than a similar, proprietary effort. In effect, developing an open source DBMS should be cheaper per line of code than developing Oracle.
I'd also suggest that any project with momentum (that is, an active community of developers) also reduces the copyright owner's sales and marketing costs. The user community acts as evangelists, and the net acts as a distribution channel.
