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Eazel's Business Model

by John Ochwat
09/15/2000

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Eazel Inc. is in an enviable position for a startup. It has talented programmers, experienced management, a comfortable cushion of startup cash, and lots of attention from the business press.

Jerry Borrell, editor in chief of Upside magazine, gushed in a June profile of the company, "Where do I line up to invest in such an 'it's only a matter of time before the IPO' firm, you ask? Through the wisteria-draped doorway of Eazel, on San Antonio Road in Palo Alto."

Much of this excitement comes from two things. The first is Eazel's corps of GUI whizzes, some of whom worked on the original Macintosh. The second is their product, the "Nautilus Graphical Shell for Linux," basically the Linux equivalent of Windows' file manager or the finder in Mac OS.

A good user interface for Linux has long been a Holy Grail for software developers, and one of the "killer applications" that many people have thought is holding Linux back from making major inroads in the desktop OS market. So as Eazel's all-star team is on the verge of rolling out Nautilus, it's tempting to agree with Jerry that the company is can't-miss.

Nautilus will be released under the GNU General Public License, which means it will be free. Which raises one little question: How will Eazel turn a profit?

Your own private systems administrator

"The sharing and collaboration that takes place in open source is what got us excited (about making Nautilus open source)," says Mike Boich, Eazel's president and CEO. "We thought briefly about writing and distributing proprietary software, but we decided it was against the grain and character of what excited us in the first place."

(Eazel's software is a part of the GNOME environment, which is included in most major Linux distributions including Red Hat, Mandrake, TurboLinux and others.)

You got a license for that?

Since "open source" is often synonymous with "free," it can be a little confusing trying to figure out how companies intend to make money on Linux software.

According to Mozilla.org, the GNU General Public License (or GPL) requires that any "derivative works" based on software covered by the GPL also be covered by the GPL, and that source code to these works be made publicly available. This means that any development that anyone does that is derived from GPLed code must also be made free.

Nautilus will be released under the GPL. However, because components (that is, pieces of software) work with Nautilus but are not a part of Nautilus, they don't fall under the GPL. Just as Sun Microsystems' StarOffice works with Linux but was proprietary (before Sun opened its source), third-party components for Nautilus can be, too.

Being free at the beginning of an application's life is one thing; being free for all time is another. For example, there's the crack-cocaine marketing model, where something is free until users are addicted, at which point it costs. Then there's the software variant of that, where the stripped-down demo version is free, but the fully configured application is not. Nautilus is free now. But will it cost money in the future?

"Never say never, but our policy is that all our software will be GPL software," Boich says, "although it's conceivable that third parties will distribute modules that will plug into Nautilus that are proprietary."

It's also conceivable that Eazel could partner with a third-party developer (such as Adobe for a Linux PDF viewer, for example) and even share a portion of revenue. But it's important to note that while these components work on Nautilus, they are not a part of Nautilus - and are thus not bound by the GPL (see sidebar).

At this point, however, these partnerships and revenue streams are all hypothetical.

What's a little confusing about Eazel is that although it looks like a software company - it has, after all, developed Nautilus - Boich says that it's going to morph into a service provider. "What we hang our business model on is a network-aware, component framework that will allow us to provide services to our customers," he says.

The idea is for people to obtain Nautilus for free. Once they have it and have registered with Eazel, they will be able to subscribe to a service that will allow them to log on to the Eazel web site and get a variety of Internet-based services, including software updates and web-based storage.

Eazel is aiming to have a public beta of Nautilus and services online by the end of September. "At that point, we'll have a software catalog online, but ours will be tightly coupled to an installer in Nautilus, so that with a single click you can get software installed on your system. And over time that service will evolve to include auto update notification," Boich says.

While the details are still being hammered out, it looks as if the software catalog will be free, as will a certain amount of storage comparable to what other providers currently offer. The automatic update service will be part of a yearly subscription (expected to cost between $30 and $50 per year); extra Web-based storage will likely be priced on usage.

"There are probably 100 applications today that account for 80 to 90 percent of downloads," Boich says. "We'll make our best effort to enable users to install anything else, but with the caveat that we haven't tested all 10,000 applications, but we've tested the top 100."

"The overall gestalt is that of trying to provide services like a systems administrator, so that Linux users who are not virtuosos will get value from software."

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