Comparison of open-source and closed-source software

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Free/open-source software – the source availability model used by free and open-source software (FOSS) – and closed source are two approaches to the distribution of software.



Under the closed-source model source code is not released to the public. Closed-source software is maintained by a team who produces their product in a compiled-executable state, which is what the market is allowed access to. Microsoft, the owner and developer of Windows and Microsoft Office, along with other major software companies, have long been proponents of this business model, although in August 2010, Microsoft interoperability general manager Jean Paoli said Microsoft "loves open source" and its anti-open-source position was a mistake. [1]

The FOSS model allows for able users to view and modify a product's source code, but most of such code is not in the public domain. Common advantages cited by proponents for having such a structure are expressed in terms of trust, acceptance, teamwork and quality. [2]

A non-free license is used to limit what free software movement advocates consider to be the essential freedoms. A license, whether providing open-source code or not, that does not stipulate the "four software freedoms", [3] are not considered "free" by the free software movement. A closed source license is one that limits only the availability of the source code. By contrast a copyleft license claims to protect the "four software freedoms" by explicitly granting them and then explicitly prohibiting anyone to redistribute the package or reuse the code in it to make derivative works without including the same licensing clauses. Some licenses grant the four software freedoms but allow redistributors to remove them if they wish. Such licenses are sometimes called permissive software licenses. [4] An example of such a license is the FreeBSD License which allows derivative software to be distributed as non-free or closed source, as long as they give credit to the original designers.

A misconception that is often made by both proponents and detractors of FOSS is that it cannot be capitalized. [5] FOSS can and has been commercialized by companies such as Red Hat, Canonical, Mozilla, Google, IBM, Novell, Sun/Oracle, VMware and others. [6]


Closed-source software

The primary business model for closed-source software involves the use of constraints on what can be done with the software and the restriction of access to the original source code. [6] This can result in a form of imposed artificial scarcity on a product that is otherwise very easy to copy and redistribute. The result is that an end-user is not actually purchasing software, but purchasing the right to use the software. To this end, the source code to closed-source software is considered a trade secret by its manufacturers.


FOSS methods, on the other hand, typically do not limit the use of software in this fashion. Instead, the revenue model is based mainly on support services. Red Hat Inc. and Canonical Ltd. are such companies that give its software away freely, but charge for support services. The source code of the software is usually given away, and pre-compiled binary software frequently accompanies it for convenience. As a result, the source code can be freely modified. However, there can be some license-based restrictions on re-distributing the software. Generally, software can be modified and re-distributed for free, as long as credit is given to the original manufacturer of the software. In addition, FOSS can generally be sold commercially, as long as the source-code is provided. There are a wide variety of free software licenses that define how a program can be used, modified, and sold commercially (see GPL, LGPL, and BSD-type licenses). FOSS may also be funded through donations.

A software philosophy that combines aspects of FOSS and proprietary software is open core software, or commercial open source software. Despite having received criticism from some proponents of FOSS, [7] it has exhibited marginal success. Examples of open core software include MySQL and VirtualBox. The MINIX operating system used to follow this business model, but came under the full terms of the BSD license after the year 2000.

Handling competition

This model has proved somewhat successful, as witnessed in the Linux community. There are numerous Linux distributions available, but a great many of them are simply modified versions of some previous version. For example, Fedora Linux, Mandriva Linux, and PCLinuxOS are all derivatives of an earlier product, Red Hat Linux. In fact, Red Hat Enterprise Linux is itself a derivative of Fedora Linux. This is an example of one vendor creating a product, allowing a third-party to modify the software, and then creating a tertiary product based on the modified version. All of the products listed above are currently produced by software service companies.

Operating systems built on the Linux kernel are available for a wider range of processor architectures than Microsoft Windows, including PowerPC and SPARC. None of these can match the sheer popularity of the x86 architecture, nevertheless they do have significant numbers of users; Windows remains unavailable for these alternative architectures, although there have been such ports of it in the past.

The most obvious complaint against FOSS revolves around the fact that making money through some traditional methods, such as the sale of the use of individual copies and patent royalty payments, is much more difficult and sometimes impractical with FOSS. Moreover, FOSS has been considered damaging to the commercial software market, evidenced in documents released as part of the Microsoft Halloween documents leak. [8] [9] [10]

The cost of making a copy of a software program is essentially zero, so per-use fees are perhaps unreasonable for open-source software. At one time, open-source software development was almost entirely volunteer-driven, and although this is true for many small projects, many alternative funding streams have been identified and employed for FOSS:

Increasingly, FOSS is developed by commercial organizations. In 2004, Andrew Morton noted that 37,000 of the 38,000 recent patches in the Linux kernel were created by developers directly paid to develop the Linux kernel. Many projects, such as the X Window System and Apache, have had commercial development as a primary source of improvements since their inception. This trend has accelerated over time.[ citation needed ]

There are some[ who? ] who counter that the commercialization of FOSS is a poorly devised business model because commercial FOSS companies answer to parties with opposite agendas. On one hand commercial FOSS companies answer to volunteers developers, who are difficult to keep on a schedule, and on the other hand they answer to shareholders, who are expecting a return on their investment. Often FOSS development is not on a schedule and therefore it may have an adverse effect on a commercial FOSS company releasing software on time. [11]


Gary Hamel counters this claim by saying that quantifying who or what is innovative is impossible. [12]

The implementation of compatible FOSS replacements for proprietary software is encouraged by the Free Software Foundation to make it possible for their users to use FOSS instead of proprietary software, for example they have listed GNU Octave, an API-compatible replacement for MATLAB, as one of their high priority projects. In the past this list contained free binary compatible Java and CLI implementations, like GNU Classpath and DotGNU. Thus even "derivative" developments are important in the opinion of many people from FOSS. However, there is no quantitative analysis, if FOSS is less innovative than proprietary software, since there are derivative/re-implementing proprietary developments, too.

Some of the largest well-known FOSS projects are either legacy code (e.g., FreeBSD or Apache) developed a long time ago independently of the free software movement, or by companies like Netscape (which open-sourced its code with the hope that they could compete better), or by companies like MySQL which use FOSS to lure customers for its more expensive licensed product. However, it is notable that most of these projects have seen major or even complete rewrites (in the case of the Mozilla and Apache 2 code, for example) and do not contain much of the original code.

Innovations have come, and continue to come, from the open-source world:

Code quality

In 2008, the Department of Management Science and Technology in the Athens University of Economics and Business published an analysis of the FreeBSD, Linux, Solaris, and Windows operating system kernels which looked for differences between code developed using open-source and proprietary processes. The study collected metrics in the areas of file organization, code structure, code style, the use of the C preprocessor, and data organization. The aggregate results indicated that they scored comparably to each other. [16] Another study conducted by Synopsys published in 2014, found open source code to be of better quality. [17]


A study done on seventeen open-source and closed-source software showed that the number of vulnerabilities existing in a piece of software is not affected by the source availability model that it uses. The study used a very simple metrics of comparing the number of vulnerabilities between the open-source and closed-source software. [18] Another study was also done by a group of professors in Northern Kentucky University on fourteen open-source web applications written in PHP. The study measured the vulnerability density in the web applications and shown that some of them had increased vulnerability density, but some of them also had decreased vulnerability density. [19]

Business models

In its 2008 Annual Report, Microsoft stated that FOSS business models challenge its license-based software model and that the firms who use these business models do not bear the cost for their software development[ clarification needed ]. The company also stated in the report: [20] [21]

Some of these [open source software] firms may build upon Microsoft ideas that we provide to them free or at low royalties in connection with our interoperability initiatives. To the extent open source software gains increasing market acceptance, our sales, revenue and operating margins may decline. Open source software vendors are devoting considerable efforts to developing software that mimics the features and functionality of our products, in some cases on the basis of technical specifications for Microsoft technologies that we make available. In response to competition, we are developing versions of our products with basic functionality that are sold at lower prices than the standard versions.

There are numerous business models for open source companies which can be found in the literature. [6]

See also

Related Research Articles

<span class="mw-page-title-main">Free software</span> Software licensed to preserve user freedoms

Free software or libre software is computer software distributed under terms that allow users to run the software for any purpose as well as to study, change, and distribute it and any adapted versions. Free software is a matter of liberty, not price; all users are legally free to do what they want with their copies of a free software regardless of how much is paid to obtain the program. Computer programs are deemed "free" if they give end-users ultimate control over the software and, subsequently, over their devices.

<span class="mw-page-title-main">GNU</span> Free software collection

GNU is an extensive collection of free software, which can be used as an operating system or can be used in parts with other operating systems. The use of the completed GNU tools led to the family of operating systems popularly known as Linux. Most of GNU is licensed under the GNU Project's own General Public License (GPL).

<span class="mw-page-title-main">Open-source license</span> Software license allowing source code to be used, modified, and shared

Open-source licenses facilitate free and open-source software (FOSS) development. Intellectual property (IP) laws restrict the modification and sharing of creative works. Free and open-source software licenses use these existing legal structures for the inverse purpose of granting freedoms that promote sharing and collaboration. They grant the recipient the rights to use the software, examine the source code, modify it, and distribute the modified software. These licenses target computer software where source code can be necessary to create modifications. They also cover situations where there is no difference between the source code and the executable program distributed to end users. Open-source licenses can cover hardware, infrastructure, drinks, books, and music.

<span class="mw-page-title-main">Open-source software</span> Software licensed to ensure source code usage rights

Open-source software (OSS) is computer software that is released under a license in which the copyright holder grants users the rights to use, study, change, and distribute the software and its source code to anyone and for any purpose. Open-source software may be developed in a collaborative public manner. Open-source software is a prominent example of open collaboration, meaning any capable user is able to participate online in development, making the number of possible contributors indefinite. The ability to examine the code facilitates public trust in the software.

Commercial software, or seldom payware, is a computer software that is produced for sale or that serves commercial purposes. Commercial software can be proprietary software or free and open-source software.

<span class="mw-page-title-main">Free and open-source software</span> Software whose source code is available and which is permissively licensed

Free and open-source software (FOSS) is a term used to refer to groups of software consisting of both free software and open-source software where anyone is freely licensed to use, copy, study, and change the software in any way, and the source code is openly shared so that people are encouraged to voluntarily improve the design of the software. This is in contrast to proprietary software, where the software is under restrictive copyright licensing and the source code is usually hidden from the users.

Multi-licensing is the practice of distributing software under two or more different sets of terms and conditions. This may mean multiple different software licenses or sets of licenses. Prefixes may be used to indicate the number of licenses used, e.g. dual-licensed for software licensed under two different licenses.

A permissive software license, sometimes also called BSD-like or BSD-style license, is a free-software license which instead of copyleft protections, carries only minimal restrictions on how the software can be used, modified, and redistributed, usually including a warranty disclaimer. Examples include the GNU All-permissive License, MIT License, BSD licenses, Apple Public Source License and Apache license. As of 2016, the most popular free-software license is the permissive MIT license.

In the context of free and open-source software, proprietary software only available as a binary executable is referred to as a blob or binary blob. The term usually refers to a device driver module loaded into the kernel of an open-source operating system, and is sometimes also applied to code running outside the kernel, such as system firmware images, microcode updates, or userland programs. The term blob was first used in database management systems to describe a collection of binary data stored as a single entity.

<span class="mw-page-title-main">Linux</span> Family of Unix-like operating systems

Linux is a family of open-source Unix-like operating systems based on the Linux kernel, an operating system kernel first released on September 17, 1991, by Linus Torvalds. Linux is typically packaged as a Linux distribution, which includes the kernel and supporting system software and libraries, many of which are provided by the GNU Project. Many Linux distributions use the word "Linux" in their name, but the Free Software Foundation uses the name "GNU/Linux" to emphasize the importance of GNU software, causing some controversy.

<span class="mw-page-title-main">History of free and open-source software</span> Aspect of history

In the 1950s and 1960s, computer operating software and compilers were delivered as a part of hardware purchases without separate fees. At the time, source code, the human-readable form of software, was generally distributed with the software providing the ability to fix bugs or add new functions. Universities were early adopters of computing technology. Many of the modifications developed by universities were openly shared, in keeping with the academic principles of sharing knowledge, and organizations sprung up to facilitate sharing. As large-scale operating systems matured, fewer organizations allowed modifications to the operating software, and eventually such operating systems were closed to modification. However, utilities and other added-function applications are still shared and new organizations have been formed to promote the sharing of software.

License compatibility is a legal framework that allows for pieces of software with different software licenses to be distributed together. The need for such a framework arises because the different licenses can contain contradictory requirements, rendering it impossible to legally combine source code from separately-licensed software in order to create and publish a new program. Proprietary licenses are generally program-specific and incompatible; authors must negotiate to combine code. Copyleft licenses are commonly deliberately incompatible with proprietary licenses, in order to prevent copyleft software from being re-licensed under a proprietary license, turning it into proprietary software. Many copyleft licenses explicitly allow relicensing under some other copyleft licenses. Permissive licenses are compatible with everything, including proprietary licenses; there is thus no guarantee that all derived works will remain under a permissive license.

Linux began in 1991 as a personal project by Finnish student Linus Torvalds: to create a new free operating system kernel. The resulting Linux kernel has been marked by constant growth throughout its history. Since the initial release of its source code in 1991, it has grown from a small number of C files under a license prohibiting commercial distribution to the 4.15 version in 2018 with more than 23.3 million lines of source code, not counting comments, under the GNU General Public License v2.

Companies whose business centers on the development of open-source software employ a variety of business models to solve the challenge of how to make money providing software that is by definition licensed free of charge. Each of these business strategies rests on the premise that users of open-source technologies are willing to purchase additional software features under proprietary licenses, or purchase other services or elements of value that complement the open-source software that is core to the business. This additional value can be, but not limited to, enterprise-grade features and up-time guarantees to satisfy business or compliance requirements, performance and efficiency gains by features not yet available in the open source version, legal protection, or professional support/training/consulting that are typical of proprietary software applications.

<span class="mw-page-title-main">Free-software license</span> License allowing software modification and redistribution

A free-software license is a notice that grants the recipient of a piece of software extensive rights to modify and redistribute that software. These actions are usually prohibited by copyright law, but the rights-holder of a piece of software can remove these restrictions by accompanying the software with a software license which grants the recipient these rights. Software using such a license is free software as conferred by the copyright holder. Free-software licenses are applied to software in source code and also binary object-code form, as the copyright law recognizes both forms.

<span class="mw-page-title-main">Berkeley Software Distribution</span> Unix operating system

The Berkeley Software Distribution or Berkeley Standard Distribution (BSD) is a discontinued operating system based on Research Unix, developed and distributed by the Computer Systems Research Group (CSRG) at the University of California, Berkeley. The term "BSD" commonly refers to its open-source descendants, including FreeBSD, OpenBSD, NetBSD, and DragonFly BSD.

BSD licenses are a family of permissive free software licenses, imposing minimal restrictions on the use and distribution of covered software. This is in contrast to copyleft licenses, which have share-alike requirements. The original BSD license was used for its namesake, the Berkeley Software Distribution (BSD), a Unix-like operating system. The original version has since been revised, and its descendants are referred to as modified BSD licenses.

Proprietary software is software that is deemed within the free and open-source software community to be non-free because its creator, publisher, or other rightsholder or rightsholder partner exercises a legal monopoly afforded by modern copyright and intellectual property law to exclude the recipient from freely sharing the software or modifying it, and—in some cases, as is the case with some patent-encumbered and EULA-bound software—from making use of the software on their own, thereby restricting his or her freedoms. It is often contrasted with open-source or free software. For this reason, it is also known as non-free software or closed-source software.

<span class="mw-page-title-main">GNU General Public License</span> Series of free software licenses

The GNU General Public License is a series of widely used free software licenses that guarantee end users the four freedoms to run, study, share, and modify the software. The license was the first copyleft for general use and was originally written by the founder of the Free Software Foundation (FSF), Richard Stallman, for the GNU Project. The license grants the recipients of a computer program the rights of the Free Software Definition. These GPL series are all copyleft licenses, which means that any derivative work must be distributed under the same or equivalent license terms. It is more restrictive than the Lesser General Public License and even further distinct from the more widely used permissive software licenses BSD, MIT, and Apache.

Software relicensing is applied in open-source software development when software licenses of software modules are incompatible and are required to be compatible for a greater combined work. Licenses applied to software as copyrightable works, in source code as binary form, can contain contradictory clauses. These requirements can make it impossible to combine source code or content of several software works to create a new combined one.


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  3. The Free Software Definition – GNU Project – Free Software Foundation (FSF)
  4. Various Licenses and Comments about Them – GNU Project – Free Software Foundation (FSF)
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  9. The "Halloween VI" document appears to give convincing evidence that Microsoft had their reasons for trying to argue against the popularity of Linux and other Free and open-source software.
  10. Bill Gates, in his reply Archived 30 November 2010 at the Wayback Machine after the public response to his own 1976 Open letter to hobbyists, said "Unfortunately, some of the companies I have talked to about microcomputer software are reluctant to have it distributed to the hobbyist, some of whom will steal it, when [...]".
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  20. Annual Report on Form 10-K
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