The Mozilla foundation & corporation give away free software and they made $44.7 million dollars after their $8.2 million in expenses in 2005. The bulk of that money is made from search engines (mostly Google), which pay Mozilla when people use the built in search functionality.

If you want an interesting philosophical twist on this you might consider some of the works of Buckminster Fuller and Dr. W. Edwards Deming. A simple summary is that they observed that the goal of a honey bee was to collect nectar, but the side effect was cross pollinating plants, which is essentially responsible for all life on Earth – if there is no cross pollination then their is no plants, which form the bottom of the food chain (connecting sun energy to everything else).

Nectar is the benefit for the bee, but cross pollination is the benefit for the whole of life. When the bee peruses their highest and best benefit of collecting nectar, everyone else benefits. This is similar to the theory of capitalism. Fuller and Deming theorized that if the bee instead focused on cross pollination, and let the collecting of nectar be a side-effect, then the benefit for the bee and the whole of life would be greater.

Of course they were interested in applying this theory to business and not bees, so they suggested that perusing a “noble goal” would result in material gain of greater amounts then perusing the material gain directly. You do need to allow the side effect to happen though. So the side effect remains an objective, but it is a side effect none the less. This is similar to game theory.

So, if this theory is true, then by the Mozilla foundation perusing their mission of “improving the Internet experience for people everywhere” and letting the side effect be the accumulation of money then they will end up with more money then if they perused money directly. Since Microsoft is in other businesses besides browsers, we would need to compare Mozilla with Opera or some other company that is dedicated to browsers exclusively. Best I can tell Opera doesn’t make and profits.

Check out this web site I found that does a much better job explaining Fuller and Deming’s theory (even with pictures.)

Overall I think what Mozilla is doing is brilliant. It is like the model King Gillette came up with, but turned around. King Gillette wanted to give his razor holders away at a discount, and then make all his money in the replacement disposable blades. What Mozilla has done is given their browser away free, and then made all their money from the search engines as a side effect of people using the browser. I wouldn’t discount their method too quickly as being unreproducible.


2 Responses to “Making Millions with Free Software”  

  1. 1 John Hunter

    Learn more about Dr. Deming’s ideas on management and see my blog posts discussing his ideas. Here is another recent article that discusses these ideas well: Manage a Living System, Not a Ledger – “The fact that Toyota makes virtually no use of management accounting targets (or “levers”) to control or motivate operations is no doubt an important reason why Toyota’s financial performance is unsurpassed in its industry. Toyota focuses its operations on continuous system improvement through endless rapid problem solving.”

  2. 2 CJ Fearnley

    Very interesting.

    You may find my Business Philosophy interesting:
    http://www.cjfearnley.com/businessphilosophy.html