The market mechanisms for funding (and making a profit from!) open-source development are still evolving rapidly. The business models we've reviewed in this essay probably will not be the last to be invented. Investors are still thinking through the consequences of reinventing the software industry as one with an explicit focus on service rather than closed intellectual property, and will be for some time to come.

This conceptual revolution will have some cost in foregone profits for people investing in the sale-value 5% of the industry; historically, service businesses are not as lucrative as manufacturing businesses (though as any doctor or lawyer could tell you, the return to the actual practitioners is often higher). Any foregone profits, however, will be more than matched by benefits on the cost side, as software consumers reap tremendous savings and efficiencies from open-source products. (There's a parallel here to the effects that the displacement of the traditional voice-telephone network by the Internet is having everywhere).

The promise of these savings and efficiencies is creating a market opportunity that entrepreneurs and venture capitalists are now moving in to exploit. As the first draft of this essay was in preparation, Silicon Valley's most prestigious venture-capital firm took a lead stake in the first startup company to specialize in 24/7 Linux technical support (Linuxcare). In August 1999 Red Hat's IPO was (despite a background slump in Internet and technology stocks) wildly successful. It is generally expected that several Linux- and open-source–related IPOs will be floated before the end of 1999 —and that they too will be quite successful. (Year 2000 update: they were!)

Another very interesting development is the beginnings of systematic attempts to make task markets in open-source development projects. SourceXchange and CoSource represent slightly different ways of trying to apply a reverse-auction model to funding open-source development.

The overall trends are clear. We mentioned before IDC's projection that Linux will grow faster than all other operating systems combined through 2003. Apache is at 61% market share and rising steadily. Internet usage is exploding, and surveys such as the Internet Operating System Counter show that Linux and other open-source operating systems are already a plurality on Internet hosts and steadily gaining share against closed systems. The need to exploit open-source Internet infrastructure increasingly conditions not merely the design of other software but the business practices and software use/purchase patterns of every corporation there is. These trends, if anything, seem likely to accelerate.