Under the closed source model source code is not released to the public. Closed source software usually is developed and maintained by a team who produces their product in a compiled executable state, which is what the market is allowed access to. Microsoft, the owner and developer of Windows and Microsoft Office, along with other major software companies, have long been proponents of this business model.
The FOSS model allows for able users to view and modify a product's source code. Common advantages cited by proponents for having such a structure are expressed in terms of trust, acceptance, teamwork and quality.
A non-free license is used to limit what free software movement advocates consider to be the essential freedoms. A license, whether providing open source code or not, that does not stipulate the "four software freedoms", are not considered "free" by the free software movement. A closed source license is one that limits only the availability of the source code. By contrast a copyleft license claims to protect the "four software freedoms" by explicitly granting them and then explicitly prohibiting anyone to redistribute the package or reuse the code in it to make derivative works without including the same licensing clauses. Some licenses grant the four software freedoms but allow redistributors to remove them if they wish. Such licenses are sometimes called permissive software licenses. An example of such a license is the BSD license which allows derivative software to be distributed as non-free or closed source, as long as they give credit to the original designers.
The primary business model for closed-source software involve the use of constraints on what can be done with the software and the restriction of access to the original source code. This can result in a form of imposed artificial scarcity on a product that is otherwise very easy to copy and redistribute. The end result is that an end-user is not actually purchasing software, but purchasing the right to use the software. To this end, the source code to closed-source software is considered a trade secret by its manufacturers.
FOSS methods, on the other hand, typically don't limit the use of software in this fashion. Instead, the revenue model is based mainly on support services. Canonical Ltd. is one such company that gives its software away freely, but charges for support services. The source code of the software is usually given away, and pre-compiled binary software frequently accompanies it for convenience. As a result, the source code can be freely modified. However, there can be some license-based restrictions on re-distributing the software. Generally, software can be modified and re-distributed for free, as long as credit is given to the original manufacturer of the software. In addition, FOSS can generally be sold commercially, as long as the source-code is provided. There are a wide variety of free software licenses that define how a program can be used, modified, and sold commercially (see GPL, LGPL, and BSD-type licenses). FOSS may also be funded through donations.
This model has proved somewhat successful, as witnessed in the Linux community. There are numerous GNU/Linux distributions available, but a great many of them are simply modified versions of some previous version. For example, Fedora Linux, Mandriva Linux, and PCLinuxOS are all derivatives of an earlier product, Red Hat Linux. In fact, Red Hat Enterprise Linux is itself a derivative of Fedora Linux. This is an example of one vendor creating a product, allowing a third-party to modify the software, and then creating a tertiary product based on the modified version. All of the products listed above are currently produced by rather successful software service companies.
Operating systems built on the Linux kernel are available for a wider range of processor architectures than Microsoft Windows, including PowerPC and SPARC. None of these can match the sheer popularity of the x86 architecture, nevertheless they do have significant numbers of users; Windows remains unavailable for these alternative architectures, although there have been such ports of it in the past.
The most obvious complaint against FOSS revolves around the fact that making money through some traditional methods, such as the sale of the use of individual copies and patent royalty payments, is much more difficult and sometimes impractical with FOSS. Moreover, many see the introduction of FOSS as damaging to the market for commercial software. Most software development companies sell licenses to use individual copies of software as their primary source of income, using a combination of copyright, patent, trademark and trade secret laws (collectively called intellectual property rights laws). Fees from sale and licensing of commercial software are the primary source of income for companies that sell software.
Open source software has a large number of alternative funding streams, which are actually better-connected to the real costs of creating and maintaining software. After all, the cost of making a copy of a software program is essentially zero, so per-use fees are perhaps unreasonable. At one time, open-source software development was almost entirely volunteer-driven, and although this is true for many small projects, many alternative funding streams have been identified and employed for FOSS:
Increasingly, FOSS is developed by commercial organizations. In 2004, Andrew Morton noted that 37,000 of the 38,000 recent patches in the Linux kernel were created by developers directly paid to develop the Linux kernel. Many projects, such as the X Window System and Apache, have had commercial development as a primary source of improvements since their inception. This trend has accelerated over time.
There are some who counter that the commercialization of FOSS is a poorly devised business model because commercial FOSS companies answer to parties with opposite agendas. On one hand commercial FOSS companies answer to volunteers developers, who are difficult to keep on a schedule, and on the other hand they answer to shareholders, who are expecting a return on their investment. Often FOSS development is not on a schedule and therefore it may have an adverse effect on a commercial FOSS company releasing software on time.
Open-source software has often been accused of being more derivative than innovative. This is true to some extent, mostly in the desktop arena. For example, GIMP is in many ways a reinvention of the functionality of Photoshop, while OpenOffice.org is primarily designed as a plug-compatible replacement for Microsoft Office except with support for many more formats.
Many of the largest well-known FOSS projects are either legacy code (e.g., FreeBSD or Apache) developed a long time ago independently of the free software movement, or by companies like Netscape (which open-sourced its code with the hope that they can compete better), or by companies like MySQL which use FOSS to lure customers for its more expensive licensed product. However, it is notable that most of these projects have seen major or even complete rewrites (in the case of the Mozilla and Apache 2 code, for example) and do not contain much of the original code.
Many innovations have come, and continue to come, from the open-source world:
In its 2008 Annual Report, Microsoft stated that FOSS business models challenge its license-based software model and that the firms who use these business models do not bear the cost for their software development. The company also stated in the report:
|“||Some of these [open
source software] firms may build upon Microsoft ideas that we
provide to them free or at low royalties in connection with our interoperability initiatives. To the
extent open source software gains increasing market acceptance, our
sales, revenue and operating margins may decline.
Open source software vendors are devoting considerable efforts to developing software that mimics the features and functionality of our products, in some cases on the basis of technical specifications for Microsoft technologies that we make available. In response to competition, we are developing versions of our products with basic functionality that are sold at lower prices than the standard versions.