There's a lot of criticism of freemium in the startup community, but in 2009, some of my favourite large software companies moved towards, rather than away from it.
Atlassian started their $10 charity starter packs of confluence and Jira.
Jetbrains offered their flagship IDE as a free community edition.
Fog Creek created their free student and startup edition.
IBM are also making $50k Rational tools free for small development teams.
I'm sure there are others.
These are all companies that previously did not operate freemium. More tellingly, in the Atlassian and Jetbrains examples, they took their core product, and basically gave it away for free to millions of small businesses.
What do you think this movement occured? Bad economy or great way of spreading the word and getting in at the grass roots of startups?
As a startup targetting small businesses, should this concern me? Maybe this trend is based on the fact that micro and small businesses that are emerging are just not buying software? Maybe it's an argument to be looking at larger businesses and the enterprise?
One reason is to offer the typical "The first one is free" drug dealer concept. Once you are hooked you need it. Then when you grow you can afford it and will pay for it.
They don't cannibalize their sales since the people taking advantage of the free versions wouldn't have bought it, but they also eat away at market share of competitors.
You missed a biggie -
Microsoft launched bizspark - basically "Free" msdn for small/new companies. My guess is that they were losing too many young/startups types to linux, etc. Note also that they get HUGE amounts of data and first looks at small businesses that may be targets for acquisition.
Marketshare/mindshare. That is my vote for why many of these players do it.
In response to your comment about jetbrains - they have many products - not just an IDE. This was likely (just a guess here of course) because there are other IDEs out there that were really good and perhaps causing them to lose focus on their other revenue generating products. If it costs too much to keep up with the competition and you have other profit leaders, then it might make sense to drop the cost and do other things. (again, that is speculation on my part)
I think there are some important aspects to the Fremium business model that exist in the examples you cited. I'm not sure if this is the case for all companies with a freemium model.
When budgets are under stress companies aren't going to try out new, expensive software, to see if it is better.
By basically letting some people use it for free it will help show whether the software is useful or not.
Since, in 2009, we saw many companies have to start doing some belt-tightening, this may be why there was an increase then, as, in the past, these companies may have been getting enough sales that they didn't mind if they missed some opportunities, but now they need to make certain to try to get as many customers as possible.
If your product has a nice split, and you can make a compelling argument for the pay version, then the freemium idea has value, but this model has many risks associated with it, as well as possible benefits.
In the case of jetbrains, there is another factor to weight in: Today's IDEs heavily rely on plugins. IntelliJ competes with Eclipse and Netbeans, both of which are known for their abundance of Plugins (especially Eclipse). The free version of IntelliJ might attract plugin makers since the potential potential market share is much larger than without a free version.