There are other ways free software developments are funded. Consider the Linux kernel (but you could actually take any large application): most of the developments is made by people employed by companies interested in having a good Linux kernel. For instance, a company selling hardware wants a kernel exploiting the hardware at its full potential (e.g., Intel develops the driver for its graphic chipsets, Texas Instruments for their ARM chips, Broadcom for their Wifi chips, etc.). Google builds Android upon Linux and employs kernel hackers to achieve its goals. A company in the server market wants the best possible kernel to be competitive (e.g., IBM is among the top-10 contributors, Oracle develops Btrfs, etc.). Red Hat and Novell actually are the greatest contributors to the last versions of Linux kernel. Take a look at the statistics. The page includes a ranking and mentions that more than 200 companies were involved in the development of Linux 3.3.

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