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Comment by BossingAround | Hacker News Reader

But why did Red Hat succeed then? (this is a genuine question, I'd have guessed IBM would re-package RH's products, and Oracle failed with their Unbreakable Linux)

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The big difference between Red Hat and a lot of these other companies is that if you look at a lot of their products, including the cash cow (RHEL), there is not a 1:1 mapping between the product and a single open source project.

Rather they create enterprise distributions that are made up of a number of open source projects that are (ideally) integrated into a solution. This combined with the right investment in support and training provides a product that is more compelling than "we provide a signed version of $UPSTREAM_PROJECT". I would say OEL is successful for the amount Oracle appear to invest in it (not much).

Timing helps a lot too though, in that they had a lot of success before the advent of the public cloud so are in a better position to weather the storm while they figure out a new model.

To put it succinctly, Red Hat doesn't sell Linux, they sell expertise in Linux.

Arguable this is what MongoDB, Inc. sells as well. A big part of their package for enterprise clients is optimization and consulting services.

Consulting is not the main driver of Red Hat revenue, the main thing Red Hat sells is Support.

Support is something enterprise customers want, and they will sign yearly contracts to get it. In return, if/when they have a production issue, 0-day vulnerability, etc, they have someone to contact (or may have contacted them!) to help them resolve the issue. And Red Hat has experts in both support and engineering, meaning resolution can be anything from a config change to a rapidly released patch. Happy customers renew year after year.

I work for Red Hat Consulting. This is a very different beast, consulting involves selling lots of short to medium term projects with the occasional long project, then trying to optimally staff those projects. You only get revenue while consultants are on the ground. It's not surprising to me that an open source company that relies only on consulting wouldn't be sustainable.

Then they should be as successful as RedHat. Or maybe their niche is too small and the people in that niche don't need the consulting part.

I think RH's longevity meant that it was already in a stronger position. There was also the kernel build obfuscation that happened to supposedly twhart unbreakable linux from taking everything wholesale.

Bezos and AWS happened. As most of the new growth is coming from cloud particularly for newer stack of projects, the company will have to compete with big 3 providers, who have much better economy of scale, complementary revenue streams and miles deep pocket. If launched today, Redhat would have to compete wit Amazon for maintenance of RH linux vs AWS linux which is done for ~free.

Re AWS Linux support, ~free is about right. You do pay for it. At enterprise levels, you're paying a percent of your total bill for support. That can be significant.

https://aws.amazon.com/premiumsupport/pricing/

But with it you generally get very quick responses to issues, and if your bill is enough, you get a technical account manager who gets paged when you open a ticket. They handle many things, but I believe AWS Linux is in that list of many.

Having the Technical Account Manager is quite valuable.

Red Hat sell enterprise services and solutions. The Linux distro is more of a delivery mechanism than a core product itself. IBM could very easily repackage and sell Red Hat's offerings, though IBM can only do so much when it comes to supporting those offerings, as they are not in control of what Red Hat themselves do next. They could also, of course, take a similar approach and create their own, which to some extent they actually do.

Red Hat did a smart thing and used their open source offerings to deliver business value outside of the product space. It's an approach that most other successful OSS companies seem to have have followed.

I think it is because Red Hat sold support and training.

Because they are basically a consulting firm just like Accenture or IBM. They sell their expertise / charge big rates for having their experts work on projects.

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