They all grab what they need and can get from the OSS community, tweak it (because they can, Open Source, you know), add stuff to it and wrap it into a business model that works for them. Like Google's AdSense, or selling devices with services attached, like Tivo, Apple and TomTom. Most of these companies make money and have an edge by using OSS. Unfortunately the makers of the OSS pieces probably don't get a penny. Try "Settings->General->About->Legal" on your iPhone – you’ll get 200 pages of open source licenses from the incorporated components. Apple makes a lot of money (and they should) off the iPhone, but the OSS component makers don’t. Life just isn't fair.

Maybe you've noticed that the Free Software Foundation extended the spanking new GPL3 to the Affero License -- to deal with SaaS providers? The Affero extension forces SaaS providers are to also publish their extensions and modifications they are making to the Affero licensed code, even though they are not publishing the software itself, but just the service it provides. But as usual with GPL-based licenses it does not help Open Source Software makers to make money.

But now SaaS finally gives them a business model that could give them a share of the money the SaaS providers make with their software. So why not combine the traditional OSS business model with the exploitation model and turn it into something that also makes money for the OSS makers? Make the exploiters into customers — and let's call them Service Providers from here on.

All these Service Providers are used to using OSS. Their data centers are full of it. Their people love it, live it. OSS is in their genes. This is why Microsoft has such a hard time winning this market. A Windows stack for hosted Exchange is like Active Sync and Outlook on an iPhone--eek.

This gives OSS application makers an edge over the proprietary vendors if they build their apps for high scalability and multi-tenancy. These apps naturally have an OS stack as a prerequisite, LAMP, LAMJ, LAMR, LAMPy, or what have you. This fits nicely into the infrastructures of the Service Providers, giving them the additional services to add to their product mix.

The one thing the OSS maker has to watch is the business model that he uses. It needs to scale with the business of the Service Provider or he will never make money. Revenue share with an upfront fee to cover setup-costs will do, for both the OSS maker and the Service Provider.

Why would these companies suddenly give you money that they did not before?

Three reasons:

One: The current products like simple mail and web hosting are becoming a commodity, making money there is hard.  New, higher level services that customers are willing to pay for are required.

Two: Studies show that more and more small- and medium-size businesses (SMB’s) are moving their infrastructure to Web-based services -- because running their own servers on-premises is simply way too expensive. For example, running an on-premises mail and groupware server of a 10 person company may well cost you more than $50,000 a year (installation, administration constant updates, especially of the spam and virus services, backup, fail-safe functionality etc.) -- leading to costs of a few thousand Dollars per user per year. These are customers that are willing to pay real money for such services in a hosted model because they can save an order of magnitude of money and they can get better service levels and richer functionality.

Three: New giants are entering this market. Both Microsoft and Google have announced they will be selling SaaS-based Messaging, Groupware, Office and Business applications to SMBs, NGOs and the education sector. To grab the customers away from the existing providers they give away mail, Web hosting, Domains etc. for free, virtually killing the existing business of the current SaaS providers for simple email and Web hosting.