Linux VARs: Make Money by Specializing

NEW YORK—Companies can make money from Linux—but for that to happen, its important for them to understand how open-source software models and communities work, said participants in this weeks “Linux on Wall Street” conference here.

In some ways, successful players in the Linux space will be following in the footsteps of VARs before them by adding software, hardware and services to implementations, said Larry Tabb, founder and CEO of The Tabb Group, who moderated one panel session at the show.

Yet in the open-source arena, services will emerge as particularly valuable to customers, panelists agreed.

“The pressure is on to build value,” said Duncan Johnston-Watt, chief technology officer at U.K.-based Enigmatec Corp.

“It is services that are really going to attract you guys to us,” Johnston-Watt told the audience of IT buyers.

Speakers pointed to systems integration, technical support and training services—areas long addressed by VARs—as some of the possible business models for third-party providers in the Linux and open-source markets.

But providers in these areas also tend to be active at encapsulating services in software. Enigmatec, for example, produces software designed to automate management of IT resources in emerging environments such as virtual machines.

/zimages/2/28571.gifClick hereto read Steven J. Vaughan-Nichols commentary on why XP SP2 provides reasons to switch to Linux.

Generally speaking, its tougher to make money through software development in Linux and open-source environments, since so much code is available for free, according to another speaker, Stephen Ferrando, CEO of dbConcert Inc.

But software development can also turn lucrative, for those who build highly specialized services on top of open-source software projects, he told the group.

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