Open Source Econ 101: Bull view versus Bear view

There are two conflicting takes on open source business models. The first one, exemplified below by Peter Levine, believes that there is no serious money to be made directly on open source projects. The optimist take, in the voice of Mike Volpi, outlines a strong opportunity for open source companies. As an employee and investor in XWiki SAS, an open source company, this subject rings close to home.

Peter Levine's (from a16z) fairly negative outlook on open source companies :

Yet there’s a vocal segment of software insiders that preach the looming failure of open source software against competition from proprietary software vendors. The future for open source, they argue, is as also-ran software, relegated to niche projects. It’s proprietary software vendors that will handle the really critical stuff.

The success or failure of open source is not the software itself – it’s definitely up to the tasks required of it – but in the underlying business model.


Mike Volpi from Index Ventures comes out with pretty much with the opposite outlook on things:

At Index Ventures, we have been investing in open source for 12 years, and we’ve never seen such a “perfect storm” moment for open source companies to make the jump from scrappy-and-free to large-and-profitable. [...] it’s clear that the industry is finally ready to accept and value open source startups as real businesses poised for long-term growth.

Why — after decades of entrepreneurs trying to use free open source technology to build profit-generating companies — is now the breakout moment for billion-dollar open source companies?

What's your take?