Literal meaning of "proprietary" in relation to software is that it has a copyright owner who can exercise control over what users can do with the software, in contrast to public domain.A related term is "closed-source software" which usually describes software whose source code is not published, in contrast with "open source". While most proprietary software is closed-source, source-available proprietary software also exists.Exclusive legal rights to software by a proprietor are not required for software to be proprietary. Software which is not proprietary, like public domain software and software under a permissive license, can become proprietary software by distributing compiled, binary versions of the program without making the source code available.
Proprietary software can be distributed at no cost or for a fee, and free software can be distributed at no cost or for a fee. The difference is that whether or not proprietary software can be distributed, and what the fee would be, is at the proprietor's discretion. With free software, anyone who has a copy can decide whether, and how much, to charge for a copy or related services. Here I would like to make a point that requiring users to pay for software is important as a product increases funding for the research and development of software. For example, Microsoft says that per-copy fees maximize the profitability of software development. Some proprietary software comes with source code or provides offers to the source code. Users are free to use and even study and modify the software in these cases, but are restricted by either licenses or non-disclosure agreements from redistributing modifications or sharing the software. Examples include Pine, the Microsoft Shared source license program, and certain proprietary implementations of Secure Shell. Microsoft's Reference Source License (Ms-RSL) and Limited Public License (Ms-LPL) are examples of a license where the source code is made available but it remains proprietary software.Some free software packages are also simultaneously available under proprietary terms. Examples include MySQL, Sendmail .
I believe, Open source market strategy revolves around the following:
* Give away the program and charge for installation and support (used by many Linux distributions).
* "Commoditize complements": make a product cheaper or free so that people are more likely to purchase a related product or service you do sell.
* Cost avoidance / cost sharing: many developers need a product, so it makes sense to share development costs (this is the genesis of the X Window System and the Apache web server).
My dear friends, payment fixes accountability and not monopoly for the end user. Monopoly is a result of an efficient ,smart product marketed by a responsible service provider. In 2004,It was 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. I believe that the commercialization of FOSS is a poorly devised business model because commercial FOSS(Free open source software) 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.
Open source software vendors are devoting considerable efforts to developing software that mimics the features and functionality of already available products, in some cases on the basis of technical specifications for various technologies that companies make available. In response to competition, they are developing versions of these products with basic functionality that are sold at lower prices than the standard versions. Open source software is not really cost effective. With most types of software, administration and support costs overshadow initial software license cost and annual maintenance fees--the costs that are minimized by open source are actually over run in the long run. Therefore, software buyers do not see the low or zero initial cost of open source as its important advantage.
IT always needs: a way to increase capacity or add capabilities on the fly without investing in new infrastructure, training new personnel, or licensing new software. And the concept of cloud computing is the response to this need. Cloud computing is steadily becoming an integral part of the enterprise computing environment. Lets try to analyze the fate of these business models on a cloud.
Let me refer to the emergence of Amazon Elastic compute cloud for which the software licenses are included in the per-hour rate for server instances. This pretty much removes license management as a concern altogether. The main example is Windows EC2 instances. As a user, you don’t have to deal with any Windows license consideration. You just request a machine and use it. Which of course doesn’t mean you are not paying for Windows. Amazon takes care of paying Microsoft.
The removal of license management as a concern may not make a big difference to large corporations that have an Unlimited License Agreement, but for smaller companies it may take a chunk out of the reasons to use open source software. Not only do you not have to track license usage (and renewal), you never have to spend time with a sales rep. You don’t have to ask yourself at what point in your beta program you’ve moved from a legitimate use of the (often free) development license to a situation in which you need a production license. Including the software license directly in the cost of the base Cloud resource (e.g. the virtual machine instance) makes planning (and auto-scaling) easier: you use the same algorithm as in the “free license” situation, just with a different per hour cost. The trade-off becomes quantitative rather than qualitative. You can trade a given software stack against a faster CPU or more memory or more storage, depending on which combination serves your needs better. It doesn’t matter if the value you get from the instance comes from the software in the image or the hardware.
With license management being equally unnecessary for open source or proprietary software in the Cloud, buyers can focus on other selection criteria such as costs. Unlike development or unsupported usage scenarios, both open source and proprietary products have an associated license costs in the Cloud. This is obviously for products delivered and supported by the Cloud provider or the Cloud provider’s partner.The total cost of a proprietary software including license comes down as compared to open source as the cloud providers host these products with per hour cost.
Let me try explaining you with Windows versus Linux. Specifically, I looked at the price of Windows Server 2008 R2 versus Red Hat Enterprise Linux (RHEL) on-premise and on Amazon’s Elastic Compute Cloud (EC2). I wanted to evaluate how, if at all, the Windows price premium differs on-premise versus in the Amazon cloud.
Windows Server 2008 R2 Datacenter Edition: $2,999
Windows Server 2008 R2 Enterprise with 25 Client Access Licenses: $3,999
Red Hat Enterprise Linux Premium Subscription for 1 year: $1,299
Windows price premium: 130% to 208%
Amazon EC2 license on Standard-Small AMI:
Windows Server 2008 R2: $0.12/hr
Red Hat Enterprise Linux: $0.21/hr plus $19/month per customer
Windows Price premium: -43%
Maybe you think I’ve missed some important or potentially hidden costs for the Windows AMI. I may have. I’m by no means an operating systems licensing expert. However, it’s difficult to accept that these costs would add up to Windows being 130% to 208% premium priced versus RHEL on EC2. Even if I’ve missed a pricing component that doubles the “true” price of a Windows AMI in a production setting, that would roughly put Windows and RHEL at par in terms of EC2 per hour pricing. That’s a far cry from the 130 percent to 208 percent premium for Windows over RHEL in an on-premise environment.
So it all boils down to robust, high-quality product with high levels of service and support. Users want responsibility, reliable assistance, and support from their suppliers. The biggest advantage--that proprietary software is easier to adopt--captures a moment in time, but one that is also in retreat. The politics of proprietary software will keep it entrenched for many years and the present market share of 64% of proprietary products will only increase with time.