JBoss: A classic Freemium model (Article)
Great article on how JBoss built their sales organization:
Excerpt
JBoss is a great example of the Freemium model. It perfectly illustrates several important principles of the Freemium model:
- By giving away a really great product for free, JBoss developed a loyal following and active community that virally spread the word to other developers.
- This led to an incredible adoption of the product, which could be converted into leads that flowed in at a rate that was many times higher than that experienced by most traditional software companies.
- JBoss realized that they would never monetize their entire user base. When we reached the $65m run rate level, we calculated that we had only monetized about 3% of the customer base. However that 3% represented a very attractive, and fast growing > recurring revenue stream, that was worth a lot of money to several acquirers that bid on the company at the same time as Red Hat.
- One of the key points to understand about this model: instead of building a very expensive marketing process like their competitors BEA and IBM, JBoss used their R&D resources to build a free product that achieved the same goal: widespread product awareness, and high customer demand – all for zero marketing costs.
