But how do you make money?

I love the idea that you can use software for free.  I am a big fan of open source software being made available to people.  I am also a big fan of commercial companies with an open source business model.  I am not a big fan of irrational exuberance though. Maybe that is a result of living through the dot com bubble and Alan Greenspan.  Maybe it is the recent housing/mortgage/credit bubble. In any event I was reading an article in InfoWorld today on Untangles "re-router" software.

The gist of the article was that Untangle has taken its open source router/UTM Linux based software and made it run on a Windows XP PC.  Great!  I assume they are running a virtual instance of their Linux server with the apps on top of it.  I don't think that is rocket science, but having played a bit with this myself, my first question was what is the throughput and usability like.  From what I know unless the laws of physics have been circumvented, you are not going to get a lot of performance running a UTM on that type of platform.  Sure enough Untangle's CTO acknowledges that this solution is really aimed at the under 25 user crowd.  Untangle claims this same customer would have to use several boxes otherwise for similar functionality.  The company sees this appealing to companies who don't have the money to buy the hardware and/or the resources to configure the apps.

OK, first of all there are plenty of low budget UTM's that can do this job and do it cheaply.  eSoft is one I know, our own Cobia is another and there are plenty of others.  So Untangle is talking about saving the cost of one low end box?  A few hundred dollars?  Is setting up the Untangle software going to be any easier than any of the commercial solutions? Open Source stuff is free, but generally not easy.  But here is my real problem with this from a business perspective.  Untangle is going to give this away for free and seeks to run their company from the percentage of these users who will sign up for support and higher end services.  There are lots of open source business models that work like this.  But if the customer is too small to afford to buy a server costing a few hundred dollars, what makes you think they can afford to pay for a service to manage it?  If they do need a service they need an MSSP type of product.  At the end of the day is Untangle an MSSP?  I don't think so.  Fundamentally, I think that is where the problem here lies.  How can Untangle generate enough revenue from a market sector that they say is too poor to pay for anything? 

If they did this to build presence while pursuing a higher market segment to pay the bills, that would make sense.  But I don't see that.  So at the end of the day, virtualizing your software for the SOHO crowd is dandy.  But how do you put food on the table?