Free and Closed. Why?

I was IMing with Paolo today and we were discussing his employer’s decision to migrate to open-source. The conversation took a few turns and we touched upon the concept of free closed-source software vice free open-source software. His employer had rejected a free CMS that was not open-source.

This got me into a philosophical frame of mind. I began wondering if, in this day and age, there is any reason to consciously choose to release a software product as a free, but closed-source product? I raised this question a while back with regard to ArcGIS Explorer but now I’m expanding the question. I would love to hear comments on this but I’d like to establish a few parameters:

1. I’m not interested in delving into the open-source vs. commercial software debate.
2. I’m not trying to criticize anyone who chooses to keep their source code closed. I’m genuinely curious about the decision process.
3. I’m not referring to things like “nagware”, demo software with restricted functionality or free products that are really teasers for commercial products (which is what I consider Google Earth to be).
4. Please keep it civil. We’re all grown-ups and/or professionals.

I look forward to hearing your thoughts.