The basic difference is the accessibility of source code. In a very layman term, open source allows easy access of source code to general public that can be edited and re-released in a customized format. An end-user in open source is allowed to play around with the software. Under closed source or proprietary programs model, the compiled code is not available for tinkering to the general users.
A summary of the core difference between the two models are as below
1. Cost: For the discerning mind, the chief differentiator is the price point at which both softwares are sold. Open source software is always cheaper than the licensed (or closed source) versions
2. Customization: Open source model allows and facilitates altering the source code to match individual requirement. Closed source on the other hand release the final application without releasing the code thereby restricting the access and editing of the program.
3. Community support: Open source has a very wide community support as compared to proprietary software tech support where the original software developers undertake to maintain and regularly update the software
4. Companies: While most of the developers are moving to open source platform, the biggest software producer Microsoft is still a big proponent of licensed software citing reasons such as trust, quality and teamwork. Although Microsoft is enabling and entering a paradigm shift through its statement in August 2010 where they admitted their loss in standing by their ‘anti-open source’ stance
5. Cultures: Most companies around the world that form a major chunk of software buyers are led to believe that licensed softwares are better than their open source counterpoints, which might not always be true. Also, personnel from companies might have better skillsets in tweaking the software to better serve the need for which the software was purchased
6. Collaboration: Closed source tech support is more often than not a complicated maze as compared to open source software tech support. Issue identification and error handling process is an elaborate procedure, which might not always be feasible to all organizations who might find a faster and better resolution of their issues on the huge online support community
When faced with the dilemma of choosing the appropriate model for an organization, a general rule of thumb would be that new start-ups can very well go ahead with open source software. As and when the organization grows in business, in complexity, in headcount, and in credibility, opting for proprietary software makes sense.