Value Chain Framework

Value chains encompass the full range of activities and services required to bring a product or service from its conception to sale in its final markets—whether local, national, regional or global. Value chains include input suppliers, producers, processors and buyers.

Marten has compiled a nice list of 13 hybrid business models with open source in this blog:

"1. Software is free but we need donations and subsidies to survive (Apache Software Foundation, Eclipse, ObjectWeb)



2. Software is free but we sell ads and placements (Mozilla)



3. Software is free but if you embed it in closed source, you better pay a fee (Trolltech, DB4Objects, Funambol, MySQL, etc.)



4. Software is free but services are not (Covalent)



5. Software is free but on-going maintenance, monitoring and provision of binaries is not (Red Hat)



6. Software is free but some enterprise features are not (SugarCRM, Zimbra, JasperSoft)



7. Software is free but we built a closed-source product around it (EnterpriseDB, GreenPlum)



8. Software is free but hardware is not (Sun, Asterisk/Digium)



9. Software is free but we sell everything else on the planet, including closed source software (IBM)



10. Software is free but that's not our real business (Ruby on Rails, individual contributors, etc.)



11. Software is free but we regret it (Borland with Interbase)



12. Software is free because we dumped it and don't want to see it any more (any good examples?)

13. Software is free because we want to drive web traffic (Google GWT, Yahoo YUI)"

Here's how Red Hat's model works:

1. Red Hat helps to drive Linux development, ensuring momentum and competitiveness for the open source project.
   
   
2. Red Hat splits its Linux offerings into two camps: Enterprise (Red Hat Enterprise Linux - the one you'll see prominently displayed on the company's website) and Community (Fedora). Attention and energy is primarily focused on the product that will actually bring in revenues (RHEL), but Red Hat is careful to also nurture the development community, which will pay it little to nothing but which brings other, less tangible benefits.
   
   
3. Red Hat tests and certifies RHEL to run on certain hardware, with certain software. Red Hat restricts access to this certified, supported RHEL - you can get the raw source for the uncertified RHEL, but not the compiled, ready-to-go binaries. Only paying customers get that. (Note: Red Hat recognizes that few to no large enterprises are going to depend on an unsupported, self-compiled distribution.)
   
   
4. Red Hat ties support to its software - you cannot get and run the RHEL binary noted above without buying commensurate units of support. Red Hat ensures this through its ingenious subscription agreement. If you want the real Red Hat, you must pay - there's no effective way around it. (There are workarounds, but they're not worth the bother. Red Hat knows this, and mints money from the result.)
   
   
5. Red Hat delivers updates (and ensures customers stay with it) through the Red Hat Network. Companies plug in, get updates, occasionally call for support, and make Red Hat an explosive, important open source company.