Question regarding this line "Free taken as in free speech, not free beer"
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Some will offer free (no cost) CDs because they have sufficient finances so that they can afford it - Canonical has a large pot of money and many contributors. Others do not have this and need to cover the cost of the media, the creation of the CD and post and packing.
Stallman's goal has always been to ensure that there are always FREE options available in computing--that you always have the ability to use your own hardware and software without restriction. Whether or not FOSS software costs money doesn't matter so much; what's important is that it's not burdened by limitations on what you can do with it.
What's ironic here is that the whole purpose of the statement was to point out the difference between free and FREE in a short, easy-to-understand sound byte. You're not supposed to have to explain the explanation.
That's right. Now you've got it. Although it's not actually prohibited to sell the software itself, at least under most FOSS licenses. The requirement is generally that the source code for the program must be made freely available, so you just aren't going to find many people willing to pay for it.
And yes, it's mostly in services and/or hardware that the companies make their money. But many of the operations also offer a mix of open and closed-source applications. There's no rule against running proprietary software on a free platform, after all. Also, companies can maintain control over their own trademarks, so if you want to redistribute RedHat's software, for example, you have to strip out all their trademarks and call it something else. Mozilla likewise controls the trademarks for Firefox, which is why Debian has rebranded their own version as iceweasel.