This isn't true. Writing open source software is more profitable: it's cheaper (because everyone works on it) and works better (because everyone works on it).
That's why i don't think hardware opensource will work, but that this model "worked" in the software world is a miracle. By "worked", i mean that it exists.
This is true, but in the markets where open source thrives, it's even harder to make money in closed source. One talented programmer might make a new web framework, release it, and gain some fame and/or consulting hours. Good luck selling your closed source web framework, no matter how much VC backing you have.
But writing some open source - making your tools (compilers, linters, runtimes), libraries, frameworks, monitoring, sysops/sysadmin tooling, and so on open source is much more profitable, and that's a huge subdomain of open source out there right now.
You can also get back significantly less than what you put in.
Similarly for independent developers. You don't make money off the open-source software itself. You make money by getting your name out there as a competent developer, and then creating a bidding war between multiple employers who want to lock up the finite supply of your labor. The delta in your compensation from having multiple competitive offers can be more than some people's entire salary.