My previous post on open source and open standards was originally a much longer piece which delved into some of the business model issues surrounding this debate. One of the bits I edited out, compared the commercial business model of Opera Software and Asa Dotzler's employer the Mozilla Foundation. Here's what I wrote:

"The Mozilla Foundation employs several people how coordinate the development and distribution of Firefox and the foundation’s other products. In addition the foundation runs the substantial infrastructure required to coordinate any project of this scale.  For an organization that gives it’s products away for free where does the money come from to support all these resources and activities? Who pays Asa’s salary? It turns out that the answer to this question was rather nicely dodged in an interview between Roblimo and Mozilla’s President, Mitchell Baker on /. back in March. I do find the uneasiness with which Mitchell handled the issue of funding to be a little amusing.

There is nothing wrong or immoral about making money. The economic development of the planet including the poorest members of society depends on everyone being able to generate an income. This is nicely articulated by Jeffrey Sachs in his book “The End of Poverty”.  If there’s nothing inherently wrong with making money and we all, even the staff of the Mozilla Foundation, need to do it in order to put food on the table then why is Mitchell so coy about where the money comes from? Maybe the problem is that once you start digging beneath the surface a little bit it turns out that the free software movement is just as dependant on “filthy lucre” as the rest of us. It may in fact be more dependant than commercial software companies because it has not other source of income.

The reality is that the Mozilla Foundation is nicely capitalized and funded in various ways by some very large, very profitable commercial companies. I could not find a list of these benefactors on the Mozilla Foundation site; why not? Why does the core principle of openness appear not to extend to how the Foundation is financed?"

Imagine my surprise when I looked at my feed from News Forge this morning to see that Mozila have created a wholy owned subsidiary to be called the Mozilla Corporation. Asa commented on it in his blog last night. Dan Glazman has also commented along with some speculations as to the reasons why and implications of the move. Updated: I see that Mitchell Baker has laid out the reaons in his blog.

I agree with Dan that a lot of scrutiny was probably being applied to the charitable status of the Mozilla Foundation. While the overall goals and aims of the foundation can be couched in philanthropic terms it is difficult to look at thier core activity, producing a software product, as anything other than a commericial activity. This is paticularly the case given the success they have had. I believe there may be an additional reason for this move: If you are going to compete for the hearts and minds of customers against commercial software companies you can not build a long term sustainable business based on charity. Success is also a powerful motivator. I would not be surprised to learn that the commericial companies that have been the primary backers of Mozilla since it's inception are now looking to generate some return from these investments.

The Q&A's posted on the Mozilla site indicate that nearly all the employees of the foundation will transfer to the Mozilla Corporation. In my view that means that the Foundation really does beomce little more than a shell which retains the core philanthropic aims of the Mozilla project; but not a lot else. You can not escape the conclusion that Mozilla has just become a commercial software company! Albeit one based on an open source foundation.

The Q&A is pretty comprehensive and covers most of the questions folks are going to have about this move. Unfortunately, in my view,  the one question that needed to be answered in order to understand the full strategic implications of what has been annouced, is not even addressed: What will be the business model for Mozilla Corporation? As I pointed on in "Why business models matter", you have to be able to answer this question and there are a limited ways in what the question can be answered.
 
I agree with the comments I've seen which praise this move. I agree that having another sustainable commercial software company competing for the hearts and minds of customers is good for all of us. However, it will be very interesting to see how Mozilla are able to maintain thier core principles, free pricing and the relationship with all of thier volunteer developers, while building a sustainable revenue generating business. I also hope that the move to commericial status will be backed by a hihger degree of transparency for thier financials so that everyone can understand what the business model is and where the revenues to fund it are coming from.