Open-source vs proprietary software

When adopting new design systems, CMS platforms, operating systems — and also software tools for simplifying processes in machine learning and MLOps, which is very relevant for Nebius — engineering leads are faced with a choice between open-source vs proprietary software.

As understanding the differences between open-source and proprietary software is crucial for businesses, this article dives deep into both types to examine their advantages and disadvantages. We’ll also look at the different features each solution offers, the impact of access to source code, and wider issues such as development and licensing.

Our aim is to help digital age startup founders and technical leads understand how open-source vs proprietary tools impacts our daily lives, and the pros and cons each approach offers when trying to bring a product to market.

Definitions and key differencesDefinitions and key differences

What is open-source software?What is open-source software?

Open-source software is defined as a computer program that is distributed along with its source code. This gives users the freedom to inspect, modify, customize and enhance the software in line with any licenses or agreements.

As open source is freely available and offers a community of programmers huge flexibility, the open-source movement has been embraced by many developers and companies in recent years. The key freedoms of open source are that:

• its functionality can be studied.
• it can be modified, enhanced and used for any purpose.
• there are unrestricted rights to distribute copies.

What is proprietary software?What is proprietary software?

When considering open-source vs proprietary software, one key difference is that proprietary product is not distributed with its source code. It instead remains owned and controlled by a private team. Users of proprietary product must first purchase the program to use it, while also adhering to specific license restrictions.

Although there are many advantages to using proprietary computer software, common restrictions include installation limits, sharing prohibitions and reduced flexibility as there are no opportunities for users to view or modify the source code.

Open-source vs proprietary: detailed comparisonOpen-source vs proprietary: detailed comparison

An example of open-source software is the web browser Firefox, as are open-source operating systems such as Android and Linux. Examples of proprietary software include Microsoft’s Office suite and operating systems such as MacOS and Windows. The following table presents a comparison between open-source and proprietary software from a user’s perspective.

	Open source	Proprietary software
Development process	Developed and tested through public collaboration	Management of development and testing is under the control of a closed development entity
Licensing	No authenticated license is required to access the software, allowing for modification and distribution	A license is required, which can be restrictive and may stop modification and distribution
Source code availability	Source code is public	Code accessibility is protected and not publicly accessible
Installation	Can be installed on any computer without restrictions	Installation requires a valid license
Security	Dependent on open-source community participation and upkeep	Usually company-driven and requires development resources
Flexibility	Significant flexibility, with the freedom to inspect and modify the product and data. This drives innovation	A more restrictive closed source license prevents inspecting and modifying code
Maintenance	Community driven. Bug fixes may only be provided by a handful of community members	Provided by the publisher across its lifetime in response to customer needs
Intellectual property protection	Limited protections	Full protections
Support	Not provided as a service. Normally requires checking documentation or crowdsourcing information	Provided by the publisher in response to customer needs
Cost	Generally no initial fee. But, over time, relying on open-source systems may incur developer maintenance costs	Typically requires a purchase or subscription
Ease of use	Getting started depends on how much community documentation is available to a user	Vendors often focus on usability, as user-friendly product encourages continued use

Advantages and disadvantagesAdvantages and disadvantages

Advantages of open sourceAdvantages of open source

Many developers have embraced open-source software as its advantages include:

• Customizable: Users can modify it to suit their needs, making it a good choice for businesses that need specialized tools that meet specific requirements.
• Cost-effective: Open source is often free, which means you save a lot of money on licensing fees and other expenses.
• Transparency: It’s is transparent, which means users can view the source code and understand how the software works. This makes it easier to identify and fix bugs and vulnerabilities.
• Community-driven: It’s is developed by a community that works collaboratively to improve the product. It continues to evolve and new features and improvements are regularly added.
• Compatibility: Open-source tools are usually designed to be compatible with other software and systems. This makes it easy to integrate into existing workflows and systems.

Disadvantages of open sourceDisadvantages of open source

But even with its benefits, open-source software has disadvantages you should be aware of when exploring the best solution for you.

• Technical expertise: An open-source project often requires technical expertise to install and configure, and you may need specialized staff to manage it.
• Security: Open source is more vulnerable to security threats as hackers can view the source code and identify vulnerabilities.
• Support: Open source may not have the same level of support as proprietary software. This means you may have to rely on online communities and forums for assistance and support.

Advantages of proprietary softwareAdvantages of proprietary software

As proprietary product is owned and controlled by a company or individual, it presents its own advantages and disadvantages that must be weighed up when choosing the best solution for your business.

Advantages of proprietary software include:

• Support: Proprietary products often come with a high level of support, which means you can rely on the vendor for help when needed.
• Security: Proprietary software is often more secure than open source as the source code is not available for hackers to view.
• Ease of use: In most cases, proprietary systems are designed to be easy to use. This means you don’t need any technical expertise.
• Compatibility: As proprietary software is often designed to be compatible with other software and systems, it can be easily integrated into your existing workflows and systems.

Disadvantages of proprietary softwareDisadvantages of proprietary software

As with open source, there are disadvantages to using proprietary systems that must be considered:

• Cost: Including licensing fees and other costs, proprietary software can be expensive. You may face large costs, particularly if you need multiple licenses.
• Limited customization: Proprietary software is mostly designed with a specific set of features and functions, which can be a disadvantage if you require a specialized solution.
• Lock-in: It often includes long-term contracts or license agreements. This requires users to be locked into using it, even if they find a better alternative.
• Limited innovation: Proprietary tools are often developed by a single company, which means that innovation and development may be limited.

Business models and considerationsBusiness models and considerations

The software business is mainly driven by companies that sell commercial versions of proprietary products. But while open-source projects rarely begin life as a commercial concern, many have been spun off into commercial offerings with their own ways to generate revenue.

As a result, many of the new products released each year come from startup companies built around bringing both open-source and proprietary solutions to market.

Open-source business modelsOpen-source business models

When an open-source software startup pivots from an open-source to a commercial business model, common approaches include:

• Professional services or ProServ: Companies such as Red Hat, IBM and Chef offer professional services such as training, technical support and consulting to help companies get the best from open-source products.
• Open core or freemium: Companies such as Docker, GitLa and MongoDB require publishers to maintain multiple codebases. This includes a core codebase that remains open source, and a gated commercial codebase that offers premium functionality as upgrades that customers must pay for.
• Software as a service (SaaS): Companies such as GitHub and Automattic (the vendor of Wordpress) require customers to accept a binding contract, but also offer robust and reliable technical support for their open-source solutions.
• Donations/foundation: Rather than charge for products or services, organizations such as Mozilla Foundation and Wikimedia (provider of Wikipedia) rely on charitable donations to continue their operations.

Proprietary software business modelsProprietary software business models

Startups selling proprietary software products tend to follow one or both of these paths for their go-to-market (GTM) motion:

Inbound: This model relies on attracting interest to your business. For startups it’s most common to use a website to attract leads via search engine optimization (SEO) of content, and promotion through other channels such as social media, video and podcasts.

Outbound: This model depends on having sales professionals to pitch products to potential customers. It’s common for companies to begin their operations by focusing on closing sales deals via networks and references, then scale up to having coverage across all stages of their sales funnel. This coverage includes:

• marketing supporting the top-of-funnel (TOFU)
• inside sales, also known as business development representatives or sales development representatives, qualifying leads around the middle-of-funnel (MOFU)
• outside sales or account executives managing active discovery and closing deals at the bottom-of-funnel (BOFU)

Use cases for open-source and proprietary softwareUse cases for open-source and proprietary software

When choosing between open source and proprietary, your decision will ultimate depend on your specific use case. Here are some notable examples:

• Web servers: Open-source software such as Apache and Nginx are popular choices for web servers. This is because they are cost effective, highly customizable and have strong community support that can be used to quickly solve software problems.
• Operating systems: Both open-source and proprietary operating systems are widely used. Open source operating systems such as Linux are customizable and have strong community support, whereas proprietary operating systems such as Windows and macOS are designed to be user friendly and offer customers strong vendor support.
• Productivity software: Proprietary productivity tools such as Microsoft Office and Adobe Creative Suite are widely used and are popular choices for businesses. They’re easy to use, have strong support, are updated regularly and also offer a wide range of features and functions.
• Cloud services: Cloud services such as Amazon Web Services and Microsoft Azure are most often proprietary. They offer customers a wide range of features and functions, strong vendor support when issues arise, and are designed to be scalable with your business.

Conclusion and takeawaysConclusion and takeaways

Before making the choice between open source vs proprietary, it’s vital to understand your business needs, technical requirements and budget. While open source offers customization and community support — and is ideal for those who value flexibility — proprietary products provide stability and dedicated support.

As a startup founder or project leader, you probably already have an opinion on whether open source or proprietary is the right approach for you. But, by using this article, our goal is to help you make a balanced decision, and fully understand how each path differs in terms of development, licensing and GTM strategy.