open core model (open core software)

The open core model is a business strategy where a company offers a “core” version of a product with limited features as free and open source (FOSS) software at the same time an add-on commercial version is released as proprietary software. The resulting open core software is made up of a combination of open source and closed source attributes, sometimes referred to as freemium software.

Typically, the free version of the application is based on a popular open source project and intended to be run on a server. This allows a company to build a base of users and contributors that can add to the source code. The company will then develop an enterprise version, where the proprietary value added may be concentrated on areas where the project falls short. Added features are usually aimed at the needs of corporate customers such as Vertical scalability, third-party integration, improved security or higher speed.

Examples of open core software companies include:

Additionally, established vendors, led by Microsoft and IBM, have embraced open source and the open core model more recently. However, evidence suggests that emerging open core vendors are concerned about their bottom line and the longevity of open core platform businesses. This has led to efforts made by open core businesses to create a source license model that requires external service providers to contribute either code or funds to the open source community when they create services based on open source projects.

The concept of the open core model is controversial because many critics say software cannot be considered “open” source if additional fees are required. It also blurs the line between software licenses and what is fair use.

Benefits and drawbacks of the open core model

Among the benefits of open core-based products are lower total cost of ownership, speedier development and greater productivity of IT management or administration. However, the payoff of open core efforts depends on the quality of the implementation of closed source features and the usability improvements of the total product built on an open source core.

Typically, an open source community provides beneficial and high-quality developer tools, application programming interfaces (API) and frameworks. However, some open source efforts fall short in ease of use, user experience, documentation or productivity. This is due to the disconnect between corporate developers and non-technical users such as citizen developers, business analysts and users.

This was last updated in April 2019

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