Open Source + ServiceWhat it means: Companies sell support and services around open-source software.Who\u2019s doing it: Compiere (ERP), JBoss (middleware), Red Hat (Linux)Advantages for CIOs: You pay only for support, not software. The cost to switch providers is relatively low because the source code is available to anyone.Startup challenges: Difficult to build businesses because switching costs are low, as are barriers to entry. CIOs will always favor large, established vendors over startups unless the startups also control code development. Hard to get venture funding because venture capitalists are looking for sustainable competitive advantage in their investments. Unless the software is complex or mission-critical, CIOs may choose to support it themselves.MixedWhat it means: An open-source code base with proprietary add-ons.Who\u2019s doing it: Sourcefire (security), SugarCRMAdvantages for CIOs: CIOs may not need the proprietary stuff, but if they do they\u2019ll already have acquired deep experience with the open-source product before buying the add-ons.Startup challenges: There\u2019s ample motivation to make the open-source product inferior to the proprietary package, transforming the open source into trial software. If that happens, there may be a backlash among open-source developers and users wanting to see all the code.Open Source + Buy OffWhat it means: Companies offer a proprietary license for their open-source software so that users can modify the software and redistribute it without having to make the code changes available to the public.Who\u2019s doing it: MySQL (database), Sleepycat (database)Advantages for CIOs: The open-source software has all the features of the proprietary version.Startup challenges: Sales of the proprietary version are limited mostly to those companies that want to redistribute it as part of their own hardware or software packages.Open Source + AggregationWhat it means: Companies assemble various open-source software packages into integrated units that are easier for CIOs to consume.Who\u2019s doing it: Exadel, Navica, SourceLabs, SpikeSourceAdvantages for CIOs: Simplifies open-source integration and support.Startup challenges: Barriers to entry are low, brand differentiation is difficult, lack of ownership of open-source projects limits the influence of the company in the development of the code.Open Source + HardwareWhat it means: Hardware makers use open source as the foundation for the software that runs their machines.Who\u2019s doing it: Cisco, Digium, NetezzaAdvantages for CIOs: Lower prices on hardware.Startup challenges: It\u2019s difficult to differentiate on hardware alone, especially when CIOs are looking to standardize their infrastructures.