Red Hat becomes first open-source company to make $2B
zdnet.com
zdnet.com
They sent a bunch of us to a week long Linux Internals course at Red Hat. Really excellent class, knowledgeable instructor (turned us onto fedora, linux weekly news (https://lwn.net) and centos before red hat partnered with them). When the class wasn't exactly what we expected the instructor took the last day to go over some of the processor scheduling/ real time extension stuff we needed to know (My company's employees were the only one taking the class). The OS transition was shelved for a bit and I ended up leaving that company, but the course really changed my mind about that company.
Good for them.
If you earn 200k a year, it doesn't mean you saved 200k.
The article states, "Analysts estimated Red Hat would make $534 million."
Not always the most common spoken definition...
When your biggest competitor is yourself at a $0 price point, how do you compete?
You're not going to be in the $1B space selling services, but neither are you at risk of extinction.
Juggling those becomes very difficult.
I've been following this space for years, and there are no easy answers.
I think the model where the 'secret sauce' is proprietary, and you give away the infrastructure, like, say, Ruby on Rails, seems to work ok. Produces some good open source software and is still an 'easy'/straightforward business model, because you're selling a product.
The two are not incompatible. Most of our new features are paid for by our clients, some of which we then include into our main product. Maintenance comes from other sources of revenue, though - hosting, for example, since many companies would rather not deal with that, even if they could.
There are lots and lots of companies in the government and huge enterprise services space that have more than a billion in revenue.
A few off the top of my head:
* https://newsroom.accenture.com/fact-sheet/
That said, it's not like you can't make money selling services.
Well, IBM and Oracle sell services on Open Source products and even Microsoft does nowadays...
And they could sell services for my open source product too, if they fancied it.
So how that makes me much safe?
I'll try to keep it short this time :-). Michael Tiemmann was one of the founders of Cygnus software, which was started on $6K and was sold to Red Hat for $600M. Tiemmann went on to become CTO of Red Hat and is currently (I think) VP of Open Source Affairs.
The key quotes from this link. When looking at the GNU Manifesto, "Suffice it to say that on the surface, it read like a socialist polemic, but I saw something different. I saw a business plan in disguise."
Later he goes on to say: "I would explain how freedom to share would lead to greater innovation at lower cost, greater economies of scale through more open standards, etc., and people would universally respond 'It's a great idea, but it will never work, because nobody is going to pay money for free software.' After two years of polishing my rhetoric, refining my arguments, and delivering my messages to people who paid for me to fly all over the world, I never got farther than 'It's a great idea, but . . .,' when I had my second insight: if everybody thinks it's a great idea, it probably is, and if nobody thinks it will work, I'll have no competition!"
IMHO opinion, Red Hat's best idea was acquiring Cygnus and buying into Tiemmann's ideas. The result is what you see now.
The thing that fascinates me is that Tiemmann still has no competition because nobody thinks it will work.
I'm curious about Sendmail. What was the business model? Cygnus's business model was essentially custom development. They did have a proprietary product for a short time, but as one of the terms of sale of the company they ditched it.
Just looking at sendmail now, it appears they were trying to make money dual licensing. I agree that this will never work.
Sadly a new CEO came in and declared that "the margins are in boxed software, so that's what we're going to focus on" and then fired all the consultants.
So maybe you're right, maybe it would have worked if they had stuck to the original plan.
But even then, it still wasn't a path to a huge business. 500M a year in revenue is definitely amazing and I would kill to own such a business, but it's not "rocket ship" successful, which is what most of the folks with this model are aiming for.
Strictly speaking Open Source is not failed business model because it simply isn't a business model at all. It's a model for licensing software, not how to make money. But, I know what you mean, it does add another level of complexity.
However, there are ways to run a model that has many of the advantages while also keeping value in the commercial aspects. For RH/SUSE they have two versions - the free stuff, and their certified distribution. The basic version of that is that their paying customers are primarily slow-moving corporates and the military. While people say they sell "support", a key part of the package is hardware and software certification - they're selling compatibility and stability and certainty. If you're in IT in a Fortune 100 and you want to run SAP, even if your tech team could run Fedora, SAP isn't certified on it, and if things do go wrong do you want to be in that conversation?
They pay me to continue working on my desktop Linux project (from the bay area no less) and have in no way impeded my personal direction for the project. Quite the opposite, I now have a team of people willing to help me move faster by solving external problems as I reach them.
How does Red Hat handle remote work?
Outside of that there is also a fair bit of freedom/latitude for individual teams to do what works for them.
Obviously there is nothing wrong with that as their revenue shows, its just that the internal corporate DNA changes to a certain degree.
I don't know anything regarding Linus.
He had one of his tedious, high-profile, foul-mouthed rants at a RH kernel dev when Linus didn't understand the dev's patches. Is that what you're thinking of?
They did give Linus a boatload of shares around the time they were going public.
In classic Torvalds style he wrote that if Red Hat wanted to deep throat Microsoft, they were free to do so in their distro.
It is required for support for certain products on linux, like Oracle. Also, RHEL is tested with various distributed filesystems, etc.
I assume their support is good also, but I haven't used that.
For me though, I have a bunch of servers running CentOS just because it's extremely solid and stable. The price you pay is that all your packages are a little old, but there are repos to get new software, so I can be on the newest Postgres and Node etc.
Insofar as competition in this space, SLES has been popular in heterogenous environments (a lot of Windows servers). Canonical and Ubuntu are newer competitors on the scene. Companies have been using Red Hat for 20 years, they are pretty good at their jobs.
Also, RHEL is a flagship but Red Hat sells support for other products like JBoss.
Last I checked they make about as much out of the JBoss-branded software as they do out of the platform stuff.
Either that, or pay 80k to Red Hat, who have dozens of kernel developers one of whom probably knows about your issue, and if it turns out not to be the kernel probably have someone on staff that can investigate that as well. Worst case they know who to contact upstream to dig deeper into your issue.
Take Google, for example. They don't pay Red Hat because they have the code and they have amazingly smart kernel developers. But that's (surprisingly) still good for Red Hat, since Red Hat benefits from the contributions to the kernel that Google makes. It's good for all users of Linux.
Same reason many people using SUSE Linux.
- Support
- SLA
- Familiarity and continuity
Sure business can pay for Debian enterprise support too, but its slightly different mindset when the whole ecosystem was made for business and enterprise.
Can you point me to the Debian developer who will give me follow the sun support on a problem that could be with the J2EE container, the OS, the virt layer, or the hardware, and has support arrangements with the vendors of all those things so they don't just sit around finger pointing?
Can you point me at the J2EE container Canonical supply?
b. Yes Canonical has follow the sun support for the "Main" section of Ubuntu. This includes the OS, the virt layer and the hardware along with relationships with the hardware vendors.
c. No Ubuntu doesn't do enterprise J2EE The only open source solution is TomCat and as you know they won't co-operate with other distributions.
It's mostly just a matter of personal taste / preference. I use both Ubuntu and Fedora/CentOS and there's not really any huge functional differences. For a long time, years ago, people argued that apt was a much better tool than yum, which may have been true at one time. But for quite some time now I've found yum to be equal to or superior to apt. Of course, Fedora has moved to dnf now, where dnf is a more modern, drop-in replacement (mostly anyway) for yum.
For me, I tend to stick mostly with the RH derived distros just out of familiarity. I've been using Red Hat Linux (and derivatives) since RH 6.2 was out, and I know it better than I know Debian or Ubuntu or Slackware or whatever.
Also Facebook is a complete driven market of selling idiots person information and advertising.
If "time to $2bn revenue" is your measure of success then 99.99% of software companies haven't made it, so presumably the entire industry has failed.
https://www.redhat.com/en/about/blog/faq-red-hat-acquires-an...
(It takes time to do this sort of thing,)
A company doing something on a fringe doesn't mean the company is defined by that fringe. Microsoft releasing a bit of open-source work doesn't make them an 'open-source' company any more than giving out freebies at a conference makes them a welfare agency.
When I can write my own patched version of Windows (A Windows distribution if you will) and people can download my modified version then it will be open source.
I'm not even a huge defender of free/libre licensing and all that, but in plain English the semantics are just different.
Someone hasn't read "the open source definition". But in either case, free software is what matters here. What you describe as "open source" is actually proprietary software.
Also, what software did mpeg describe? I can't see any such reference. And if you mistakenly meant my reference to Windows/Office, well, that was meant as a hypothetical.
What term would you use for "publicly visible, but not hackable-by-license" software as opposed to "publicly not visible, and not hackable-by-license"? The former satisfies many concerns with vendor software, in that you can examine the code yourself for bugs, vulnerabilities, or backdoors.
That link doesn't seem to have anything to do with what you said. That isn't Stallman's annotations -- he doesn't use the term "open source" and probably wouldn't want his words published on opensource.org. You probably wanted to post this: http://www.gnu.org/philosophy/free-software-for-freedom.en.h.... The main reason that the FSF and Richard Stallman distinguish free software and "open source" is because "open source" doesn't reference the moral underpinnings of the free software movement. It's just a set of 10 guidelines that appear to be entirely arbitrary (because they're secretly derived from the free software definition, but with more restrictions in some cases).
> What term would you use for "publicly visible, but not hackable-by-license" software as opposed to "publicly not visible, and not hackable-by-license"? The former satisfies many concerns with vendor software, in that you can examine the code yourself for bugs, vulnerabilities, or backdoors.
I would call both proprietary. The distinction is that they give you the code for the program as part of their proprietary software package. It doesn't make it non-proprietary if that's the distribution model they use.
Historically, the term "Shared Source" has been used to refer to those kinds of situations, although it's not exactly a strict definition.
Same thing with an NDA. if you make source available under NDA that is not Open Source either.
Not exactly. "Open Source" has a very specific meaning and it goes beyond simply "being able to inspect the source".
https://opensource.org/osd-annotated
And yes I know that OSI don't have an official trademark on the term Open Source and that the OSD isn't a de-jure standard. But I'll argue that it is the de-facto standard among knowledgeable people working in this space.
Open sourcing some strategic things makes sense for them. But for Red Hat, open source itself is the core strategy, and they open source everything.