Open source Software Products

The biggest benefit is that you can share with other developers.

For example, Ubuntu is based on Linux which has hundreds of developers around the world working on it. The Ubuntu developers can take any feature or fix made by anyone and incorporate it into their work. A company making proprietary software needs to develop each feature on its own.

Delivering software as open source also makes it more useful to the savvy user who can tweak it to make it do things that it didn't originally do. Proprietary software is locked down, so users can't look at, or muck around with the internals.

The communities that grow up around Open Source software are often impressive.

There's a number of business models. You can do the following things, for example:

• Give the software away, sell support or consulting. An similar strategy in the world of physical products would be what Gilette does: They sell the razors at a loss to lock in the demand for razor blades.
  
• Give away the software, sell the brand. That's what Poland Spring does with its bottled water, which consumers might as well get out of their taps.
  
• Give away a software you need in-house anyway, get maintenance and debugging for free.

The classical discussion of this topic is Eric Raymond: The Magic Cauldron. It contains many more details.