What keeps Canonical going?

[Buddy's Pal]

I'm very new to Linux. I've read a lot about it...the philosophy, OSS "movement" and all that. I appreciate its altruistic nature. I love the OS.

But I don't get it as a business model. Canonical has employees. Canonical pays them and other overhead costs. The employees work hard and produce products (Ubuntu, Kubuntu, Xubuntu etc...) which Canonical then gives away. How can Canonical Ltd. ever hope to turn a profit? The same can be said for the producers of other distros.

I would love to see Sony apply the same philosophy to that 50 inch Bravia plasma screen TV I've been looking at. Maybe my lawyer should give free legal advice?

I'm not trying to be facetious or anything. I'm just curious. Why don't Linux companies sell their products at a price lower than Microsoft...you know that good old capitalistic competitive thing?

It might even speed up adoption by Joe Q. Public as I'm sure many think, "How good can this Linux thing be if they give it away?" People tend to equate free with worthless.

[smartboyathome]

There are more places to make money than selling the product itself. Canonical makes money by selling Ubuntu related merchandise as well as tech help services. Other distros (like mandrivia) make money by selling an addon repo, while Novell/Redhat makes a commercial product for the server and sells that.

[wannadumpwindows]

They make a large portion of their profits from paid commercial support. Mostly from businesses and the like. But you're more than welcome to go purchase a support contract for yourself. LoL. I'm sure they have other commercial products as well.

P.S. http://www.canonical.com/services

[-grubby]

Mark shuttleworth funds Ubuntu. He's rich. Millions of dollars. :)

[Buddy's Pal]

Still a little puzzled. They give away some products and sell others and services. Like a lawyer who bills clients but does divorces and wills for free?

Why not sell all your products? Is it to get people on board? Build a potential customer base? Would it be comparable to that 0$ cell phone I can get if I sign a 3 year contract? Or a printer that costs less than a replacement ink cartridge?

[buried]

I think that Mark Shuttleworth funds it :)

[kevin11951]

they not only charge for support, but they also have landscape (like webmin i think) that they charge for.

[Dr. C]

I'm very new to Linux. I've read a lot about it...the philosophy, OSS "movement" and all that. I appreciate its altruistic nature. I love the OS.

But I don't get it as a business model. Canonical has employees. Canonical pays them and other overhead costs. The employees work hard and produce products (Ubuntu, Kubuntu, Xubuntu etc...) which Canonical then gives away. How can Canonical Ltd. ever hope to turn a profit? The same can be said for the producers of other distros.

I would love to see Sony apply the same philosophy to that 50 inch Bravia plasma screen TV I've been looking at. Maybe my lawyer should give free legal advice?

I'm not trying to be facetious or anything. I'm just curious. Why don't Linux companies sell their products at a price lower than Microsoft...you know that good old capitalistic competitive thing?

It might even speed up adoption by Joe Q. Public as I'm sure many think, "How good can this Linux thing be if they give it away?" People tend to equate free with worthless.

Canonical and other GNU / Linux distributors do not give software away. They license software for the most part under strong copyleff licenses including the GPL V2 and GPL V3. Big difference. The nature of Free Libre Open Source Software under copyleft licensing is that the development cost is drastically reduced. Canonical can produce Ubuntu 8.04 for less than 1 / 1000 th the cost that Microsoft had to spend to develop Windows Vista. So a business model based on selling support can actually work and be profitable. A good place to lean about copyleft software licensing is the Free Software Foundation http://www.fsf.org

Ubuntu was started by Mark Shuttleworth with s donation in the tens of millions of dollars. Compare this with the market capitalization of Microsoft in the 260 billion dollar range. My take Canonical needs to make $0.01 from Ubuntu for every $10 that Microsoft needs to make from Windows for the respective business models to work.

[tighem]

Briefly during the Alpha phase of Hardy, the "Default" welcome screen in firefox became a google partner webpage (and one would assume the related advertising dollars). Mozilla makes a ton of cash this way and I personally thought it was a good way for Canonical to do the same.

Canonical seems to be following the same model Amazon did, though. Grow quickly even if it means losing money. Not sure they are losing money or not. But the ShipIt CD program definitely is in the spirit of marketshare vs. profits.

[billgoldberg]

Would it be comparable to that 0$ cell phone I can get if I sign a 3 year contract? Or a printer that costs less than a replacement ink cartridge?

No, you have to pay that contract. With Ubuntu you don't have to pay nothing, and you don't have a contract. You're not attached to nothing.

Canonical makes money from support and from the shop.

[igknighted]

Why not sell all your products? Is it to get people on board? Build a potential customer base? Would it be comparable to that 0$ cell phone I can get if I sign a 3 year contract? Or a printer that costs less than a replacement ink cartridge?

Because the code is available for free... anyone could download the code, remove the trademarks and give it away anyways. Also, Ubuntu just takes the free software available, dresses it up and redistributes it. They don't really own the product they are selling (aside from tiny pieces here and there), so there will always be ways to get it linux for free no matter what.

When Mandrake dominated the desktop linux world years ago (much like ubuntu now, but probably more so), they tried to sell pieces of the OS and it angered their customers so badly they nearly went bankrupt and are still recovering today. If Ubuntu tried anything similar, they would meet the same fate.

[kripkenstein]

There are two separate issues here.

First, Canonical as a specific company. I don't think Canonical is profitable at present, it is fairly new, and growing fast. It does have lots of ways to make money, which have already been mentioned. However, Canonical isn't a public company and we have no data on how much it makes, expends, profits, etc.

Second, free software in general. As already said, there are great ways to make money off of 'giving away' software. The idea is to sell services, support, etc. - actual products, as opposed to the software itself which can be copied infinitely often at no cost (whereas you can't copy support from human beings! :) ). This sort of approach has made Red Hat $400 million last year, and those revenues are growing rapidly.

FineE made a very good point about relative development cost. Yes, Microsoft makes 100x more than Red Hat, but its development costs are also 100x, or even greater. Hence both companies end up being successful, they are just using different business models. (I would add that one is the model of the past, and one of the future, but that's another matter :) )

[karellen]

I'm very new to Linux. I've read a lot about it...the philosophy, OSS "movement" and all that. I appreciate its altruistic nature. I love the OS.

But I don't get it as a business model. Canonical has employees. Canonical pays them and other overhead costs. The employees work hard and produce products (Ubuntu, Kubuntu, Xubuntu etc...) which Canonical then gives away. How can Canonical Ltd. ever hope to turn a profit? The same can be said for the producers of other distros.

I would love to see Sony apply the same philosophy to that 50 inch Bravia plasma screen TV I've been looking at. Maybe my lawyer should give free legal advice?

I'm not trying to be facetious or anything. I'm just curious. Why don't Linux companies sell their products at a price lower than Microsoft...you know that good old capitalistic competitive thing?

It might even speed up adoption by Joe Q. Public as I'm sure many think, "How good can this Linux thing be if they give it away?" People tend to equate free with worthless.

Mark Shuttleworth

[swoll1980]

There are more places to make money than selling the product itself. Canonical makes money by selling Ubuntu related merchandise as well as tech help services. Other distros (like mandrivia) make money by selling an addon repo, while Novell/Redhat makes a commercial product for the server and sells that.

Mandriva made that repo available for free like 6 months ago

[3rdalbum]

Canonical has something like 130 employees, but most of the code in Ubuntu is done by third parties (other projects or volunteers).

Canonical makes money by selling merchandise, support contracts, and customising the distribution for the needs of clients. They are also getting into the business of selling software; that's what the Partner repository is for. Whenever you buy Partner software through Canonical, they get a commission for it.

[tdrusk]

Mark Shuttleworth has millions of dollars. He made a great operating system. This makes him more popular.

If you had millions of dollars would you fund a free operating system and have tons of people love you for it? I would.

[az]

Why not sell all your products?

You see what is valuable.

The software is not the product. All the services involved in making the software work for you are the product. There is no value in paying for software that is already free. But by the nature of FLOSS, you can get a lot more for your money by investing is customizing existing software rather than buying a proprietary program that doesn't quite do what you need, or starting from scratch.




Is it to get people on board? Build a potential customer base? Would it be comparable to that 0$ cell phone I can get if I sign a 3 year contract? Or a printer that costs less than a replacement ink cartridge?

That's the freeware business model, not FLOSS.

Free/Libre Open Source software in of itself is all about protecting your (the user's) rights. If the software is free/libre, you do not have to give away your right to obtain, use, modify and redistribute the software.

[diablo75]

Still a little puzzled. They give away some products and sell others and services. Like a lawyer who bills clients but does divorces and wills for free?

Why not sell all your products? Is it to get people on board? Build a potential customer base? Would it be comparable to that 0$ cell phone I can get if I sign a 3 year contract? Or a printer that costs less than a replacement ink cartridge?

The software is more or less "public domain". Meaning we are all entitled to our own copy to use however we please. While Canonical does do a good deal of production work as far as programming in concerned, the project remains 100% open source, and has many more volunteer developers outside of Canonical that play their part. Even the guy who doesn't know a thing about programming, but is good at describing software bugs, can be considered a contributor to the whole project.

Your confusion about this may be from little exposure to open-source projects like Linux (as you admitted). A more simple example of an open-source project you could study might be Wikipedia. Wikipedia is young, but already has millions of great articles about some of the most diverse stuff you can think of. And all of those articles are the result of millions and millions of users visiting over and over, year after year, each adding a sentence or paragraph or photo to an article, or correcting someone else's grammar, etc. The source code of an open-source OS is much like the articles on Wikipedia. They are primarily produced by the general public, and protected by licenses such as the GPL or the Creative Commons licenses for the sake of preserving the public's ownership over it, as well as their right to modify and redistribute it freely.

[barbedsaber]

afaik (which is probobly wrong)
canonical doesn't need to employ that many people, because the software is open source, anyone who can code, can go down to mums basement and help, so they have pretty low overheads.

and as has been said, Mark shuttleworth (God bless him) is Freaking rich. I mean richer than that, He was one of the first people to go into space AS A TOURIST! and he chips in a few bucks here and there to help out.

EDIT: Mark doesn't need any blessing from any god, he IS god, (maybe that went to far?)

[smoker]

of course canonical would like to make a profit, but i don't think this is the foremost thing on the agenda, at least for the moment,

value can be measured in other ways rather than just 'hard cash'

[diablo75]

I think if I were Mark Shuttleworth, I'd be happy if Canonical broke even. But we can all see the OS becoming more and more popular, which equals more business for them and many others besides Canonical who provide tech support to Ubuntu users.

[drascus]

well the philosophy has nothing to do with price really free software is about freedom for it's users not price. You can actually buy copies of Ubuntu from the canonical store that is somthing I recommend. They make money through donations, They make money through commercial support, They make money off selling merchandise. So those are all things that people considering using ubuntu should think about spending some money on. Buy some t shirts stickers and other gear. Buy commercial support. Or just donate some money. I donate to the FSF and I also buy gear and other things I like from the Ubuntu Store. I hope this all helps the developers.

[CostaRica]

MySQL was sold for $1 Billion, because of its support revenues ($60-$70 million/year). MySQL is GPL and you pay nothing for it if you do not want to...but still, Sun paid a LOT for it. It is definitely a different model that the proprietary one.

Cannonical is starting the model with Landscape.

[Kernel Sanders]

What keeps Canonical going? The love and support of each and every one of us, that's what! :lol:

[jonabyte]

Other open source "companies" are funded by larger corporations who use the product and have money to spend on software that is free for the rest of us.

[Johnsie]

Apparently they sell technical support for their O/S. However I'm yet to see a large company in my country that uses Ubuntu.

[Chame_Wizard]

He's cool,has many $ and the OS is for everyone:guitar:

[mips]

Canonical is not making a profit at present as far as i'm aware. Their business model is based around generating money from support services.

This has worked well for the likes of IBM and some others, let's hope Canonical can do it as well.

[AdamWill]

Canonical is a privately owned company, and therefore has no obligation to publish public financial results, which it doesn't. The only people who actually know whether Canonical makes money are the management and accounting departments of Canonical, and anyone they've told. :) The general belief is that it doesn't, yet, but that's not based on any hard data.

[Jussi Kukkonen]

MySQL was sold for $1 Billion, because of its support revenues ($200 million/year). MySQL is GPL and you pay nothing for it if you do not want to...but still, Sun paid a LOT for it. It is definitely a different model that the proprietary one.

MySQL definitely does not have $200M revenue. If it had, the price might have been somehow understandable... Also, most of their business is selling the commercial version, not support.

[handy]

Canonical is not making a profit at present as far as i'm aware. Their business model is based around generating money from support services.

This has worked well for the likes of IBM and some others, let's hope Canonical can do it as well.

Canonical has the luxury of not being in debt. There would be tax benefits for MS (unfortunate initials) whilst ever Canonical doesn't make a profit.

Canonical would have a long term multi-faceted business plan that they are fortunate enough to be able to afford.

I read somewhere that Mark Shuttleworth put 10 million dollars in the kitty for Canonical to make it all happen.

[michaeljt]

The only "intuitive" interface is the nipple. After that, it's all learned.

You would be surprised at how much trouble some babies have learning to drink from a breast.

[chrisdugdale]

A while back a group of Japanese companies checked out the software and music scenes. Turned out that stuff that wasn't copyright protected usually won out in the market place! This even applies in a way to Windows -- there are huge numbers of illegal copies out there. Kind of like security in stores (major survey in Japan) turns out that it's cheaper not to have all the electronics, monitering & personnel. Theft may be a little higher, but it's less than paying for the security. Of course, if you want the CD, booklet etc, you pay and in OS's there's big money in the support area.

[Erunno]

This has worked well for the likes of IBM and some others, let's hope Canonical can do it as well.

Not sure if IBM is a good comparison here since there business model is not only based on selling and supporting software but also providing whole software solutions (including conception, development, financing and support). Moreover they still have a strong standing in the hardware section and also make a lot of revenue with financial services.

[mips]

Not sure if IBM is a good comparison here since there business model is not only based on selling and supporting software but also providing whole software solutions (including conception, development, financing and support). Moreover they still have a strong standing in the hardware section and also make a lot of revenue with financial services.

Yeah probably not. They have changed a lot over the years though.