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Business Models of Drupal Distributions

This blog post is part of a series on Drupal distributions.

If you stay up-to-date in the world of Drupal news, you've probably read that Phase2 Technology has recently acquired Development Seed's Drupal distributions, OpenAtrium and Managing News.

Development Seed is one of the most innovative companies that do Drupal work, and its distributions (especially OpenAtrium) are two of the most widely used. Phase2 is a much larger company, and the primary reason both companies cite for the acquisition is that Phase2's additional resources make it better able to support the distributions.

This change has prompted several troubling questions from the community. Perhaps the most prominent: does this mean that Development Seed is leaving Drupal? And the first one to my mind: does this mean that building Drupal distributions -- a topic heralded as a major component of Drupal's future growth -- is financially impractical for smaller Drupal firms or individuals?

After much consideration and reading, I believe the answer to both questions is "no."

Development Seed, as its president Eric Gundersen is quick to point out, is a "product company." They build products because they want to use them. Their company culture revolves around coming up with innovative ideas and implementing them very effectively. OpenAtrium, for example, was built because the DevSeed team needed an intranet. It just happened to turn out that a lot of other companies did too.

Phase2 is a much bigger company. Phase2 has its product arm which has produced its own innovative distributions like OpenPublish, TattlerApp, and OpenPublic, but it also has the resources to provide serious support for the products it maintains. For example, Phase2 has just announced new support packages for OpenAtrium that Development Seed was simply too small to manage.

So ultimately, it looks like the reason for the sale of DevSeed's properties was that they have matured into full-fledged, production-ready products. DevSeed's work is done. They built amazing products that work really well for lots of people -- but now those people need support, and DevSeed decided not to shift its company's focus in order to provide that. Phase2 already provides comprehensive support. It's simply two different business models: where DevSeed makes money by being paid to work on developing new products or improving existing ones, Phase2 also makes money supporting existing products. One is not better than the other, and they're certainly not mutually exclusive at Phase2; but DevSeed chose to focus on product development over product support. Support is a business model of scale, and Phase2 has scale.

Seen in this light, it seems likely that Development Seed is not done with Drupal; they're simply busy working on other projects at the moment (involving mapping, apparently). I think we can expect more innovation to come from them in the Drupal world if their developers see a need for something new and awesome for which Drupal would be the best solution. In the mean time, the sale of their properties to Phase2 gives them more capital with which to continue developing rather than supporting.

Similarly, the purchase of OpenAtrium and Managing News by Phase2 does not imply that it is financially impractical for smaller Drupal firms to build distributions. It simply shows that different business models work better in different situations. Development-focused firms can get paid for building new distros, while support-focused firms can get paid for supporting them. If you're big enough to have more than one focus (or at least if you're willing to scale), you can do both. (If you're part of a Drupal firm thinking about building a Drupal distribution, start with the documentation.)

Congratulations and good luck to both Development Seed and Phase2. They are both great companies that have played a very positive role in the Drupal community. I look forward to seeing what they're working on next!

Isaac Sukin is a student at the Wharton School at the University of Pennsylvania. He has worked with Drupal since 2007, and is particularly interested in Drupal as a social networking platform. He interned at Mediacurrent during the summer of 2010 and continues to do guest blogging. You can follow him on his blog or on Twitter.