Red Hat In Business News

jferg was one of the first people to write about the coverage in today's Observer in regards to the latest business happenings at Red Hat. The article touches on the launch of RH Advanced Server, but one of the most telling statistics was "Red Hat now has 90 percent of its 630 employees working to lure corporations looking to move their computing platform from expensive systems running on the rival Unix operating system to Linux, widely considered to be the more cost-effective choice."

Comments

Sliding sales...

[Totonic]

Do you think that the sliding sales, not only in Redhat but others as well, could be due to these factors: 1) An increase in broadband over the last couple of years by home users. 2) The popularity of ISO's days after a new release. Instead of going to the store to buy a distribution, I can sit on my ass at home and download three ISO's, burn em to CD, and have everything except documentation. Mandrake has the right idea IMO, with their users club or whatever they call it..Reaping profits through other means.

Re:when you devote 90% of your staff to sales

[0xB]

Don't forget the development is done by millions of unpaid volunteers.

If 90% are for marketting.

[Utopia]

that means that less than 10% of the company are developers. Quite a topsy-turvy situation for a software company.

Re:If 90% are for marketting.

[sultanoslack]

Redhat isn't a software company. -- No really. Redhat sells support; they sell consulting; they sell pretty much anything that you'll pay money for that happens to be Linux related -- "solutions" and whatnot.

But they don't sell software. Sure they make a nominal amount of money off of selling boxes-o-software, but you just can't really sell something to geeks very easily that they can download.

I think that a marketing shift like they're doing is trying to funnel more people into the parts of their business model that allow them to hire that many people. Pretty much they're a huge consulting firm that just happens to find it convenient to maintain a distro that they have control over.

Uhh

[NiftyNews]

I'm no mathematician, but shouldn't 100% of your employees be making efforts to get the software sold (be it in marketing, coding good products, etc)?

Where are the other 10% of the guys, on nap duty?

Sorta Makes sense.....

[s.a.m]

Lets look at it this way. They've got the big name companies saying that they're using RH. However as the article states, they didn't pay for a copy of RH for every server. They may buy a couple of licenses and then get the ppl at RH to provide some service.

They need to expand their business, and the way to do that is to go out and let people know who you are and what you can provide them. We have seen from the article that the software itself isn't sustaining them. They need to get the services division up and running and racking more money.

We've all joked about MS having a huge marketing dept and how their product sucked. Now look at RH, their product doesn't really suck, lol barring the RH Linux sucks comments. So if they put the same marketing force out there they might be able to increase their revenues.

I say it might turn out to be one of the best things they've done...or it may bomb and send them back to the drawing board. But either way, it's a start.

Good article, medium FUD ratio

[xrayspx]

But does this actually lend some amount of truth to Microsofts stance that Linux is only really gaining the marketshare that is being lost by proprietary Unix systems? If RedHat is concentrating on stealing commercial Unix accounts, rather than getting either new businesses or MS shops, it would appear so.

This isn't bad. Commercial Unix is the easiest target for RedHat, it's far easier to convince someone to drop AIX off their 390 and replace it with RedHat than it would be to convince them to ditch Windows on 5e10 little servers. Especially in a "Microsoft Shop" type culture, which is unfortunately where I spend a lot of my time.

My belief is that RedHat has as much chance of success as the next company, and if they need to steal business from Sun, Compaq, HP, IBM to do it, so much the better. At least the customer can still get their hardware from the hardware co's and get their software from RH, best of both worlds.

Opportunistic, not helpful

[Baki]

Of course "UNIX" (whatever that is, Solaris, AIX, FreeBSD?) is an easier target than Windows. Still I think it is wrong to focus on the 'easy' targets; in the end it does not help Linux (including Redhat) if UNIX as a whole (including Linux) looses marketshare. The outside (Windows) is what we must gain from.

An internal healthy competition in the Unix camp is not necessarily bad, but if the UNIX camp is primarily focussing on getting each other, all will die soon. The only long term hope for survival is to withstand or push back the outside (non-unix).

Re:What is "Unix"?

[dnaumov]

What bothers me more, is the way the article is writted. OF COURSE Windows server software sales are higher then those of Linux server software. It's because 90% of Linux servers are being installed from CD's burnt by system administrators themselves, seeing as Linux is free, DUH! It's a waste of time to say that 41% of all server software sold in 2000 was done by MS, while only 27% is Linux. The "sold" part is indeed true, but if you look at this from the "amount of new servers installed" point of view, the whole thing turns upside down.

The article implies that RedHat tries to make money by selling RedHat software to large corporations. That's not entirely true, selling software has ALWAYS been only a fraction of things providing RedHat income. "Services" is mostly support. Corporations want support, support sells, thus, services makes money. Simple.

The only problem with selling support that I can see is the "ethical" side. GNU/Philosophy tells us we should be selling services and software support to people who use our software. The side issue is, if you really DO make great software, why would anyone buy your support ? Do you have to specifically make you software buggy so people can ask you for support and pay ?

its not so bad

[Anonymous Coward]

10% of 630 people=63. not a bad number of developers for a product that is essentially completed

Targeting UNIX vs. Windows

[Everach]

It's refreshing to see RedHat put away the Linux vs. Microsoft philospohy that so much of the Slashdot community favors, and focus on building their market share through UNIX conversion.

Extrapolating from this, they look like they're building a solidified UNIX market share, allowing them to eventually focus on the desktop and small server shops where Microsoft truly thrives

Today UNIX, Tomorrow the World! Muhahahah

A prediction:

[Anonymous Coward]

One year from now Sun Microsystems will be the largest distributor of Linux systems. Not because they will have converted from Solaris to Linux, but because by offering their own hardware and Linux version they will provide enterprises the proverbial "one neck to choke". If they are really on the ball they will give their Linux a Solaris flavor and make administering Solaris and Sun Linux systems as similar as they can. All the telcos and hosting companies currently running Solaris will be able to migrate leisurely to Sun Linux without disrupting their current business relationships. Why would I buy support from IBM/Compaq/HP/Dell for hardware and support from Red Hat/SuSE/Mandrake for software when I can get both from Sun? Sun can then continue concentrating Solaris at the midrange and high-end. Red Hat is dangerously close to being the skinny man of the tech industry: a stiff breeze may blow them away.

I disagree.

[FallLine]

I'll take it one step further. Large corporations are not the way to go with the Internet in general.

The Internet is a naturally decentralizing force. At the protocol level, it's amazingly decentralized, by design. The tendency is for anything it touches to be decentralized.

That does not follow. Just because the NETWORK infrastructure CAN support decentralization does not mean that it WILL. Yes, decentralization allows for niche markets to develop that are otherwise not possible. However, it simply does not follow that ALL, or even the bulk, of commerce will follow that trend. Put simply, a well run larger company is often able to put things together more efficiently than a small company. Take, for instance, the PC industry. There is nothing with putting together a PC that requires or demands a large company per se. Virtually anyone can buy the necessary pieces and put them together. However, we have a handful of very large companies (e.g., Dell, IBM, Gateway, etc.) that have something like 95% of the market and a bunch of smaller niche firms fight for the remaining 5% (and barely managing to stay in business). The reasons are many, but amongst others, the larger firms are able to develop the economies of scale to do it for significantly less AND generally offer better service for most customers. Thus the larger firms continue to dominate. The internet hasn't really changed this much either, quite the opposite in fact.

Consider software. Open source is the ultimate in decentralized software. Could Open Source exist in anything approaching its current scope if there were no Internet? To be blunt, it couldn't. Look at the progress of the GNU project in 1993, the midpoint of its life to date. This was also just before the great explosion in the 'net.

And yet what has it done for consumers? Relatively little.

Consider entertainment. Ten years ago, if you wanted to distribute music on any sort of scale, you had to go to the RIAA or to an indie label that was limited in its reach. If you wanted to have your writing published, you had to go to a publisher of some sort, or pay exorbitant fees to a vanity press. And let's not get started on motion pictures. Now the Internet is allowing real distribution of entertainment media at huge savings (especially when P2P is taken into account).

Here again, you focus too much on the delivery protocol and ignore the surrounding facts. While the internet and technology may technically enable artists to remove the so-called middle-men from the actual act of transfering the music/data, it really doesn't make RIAA or its respective labels any less relevant. Their function is primarily one of marketing and capital/risk taking. Even if distribution changes radically (which I could well argue against), RIAA continues and will continue to dominate the industry.

Consider media. Ten years ago, the average home in the US got, what, 30 channels of TV, plus a newspaper and a few magazines. Now, there are thousands of websites, each offering a different focus and a different point of view.

Again, this is not terribly different than the PC OEMs. We have the emergence of MORE choices amongst major companies, that continue to retain some 95% of the market, and a bunch of little guys fighting over scraps. The technology may bring offering choices more into the cost effective region, but there's nothing to say the major media conglomerates will not dominate. The major companies enjoy many significant advantages over the little guys. In any event, there's no real significant decentralization happening here if you measure it as consumer mind/hour share or in dollar figures, just the emergence of increased choice.

In short, it was the great fallacy of the 1990's that you could become rich thanks to the Internet, the dominant effect of which, ultimately, is decentralization.

Here again, I disagree. While I was no cheerleader of the DotComs, the fallacy of the internet WAS that you could get rich quick without really working for it and without having to generate any real value for society...it was thought of as more of an act of arbitrage than anything else. There is still money to be made by exploiting the benefits of the Internet, but it requires some sanity, risk taking, honest to god effort, and willingness to scrounge for capital and take on all the nay-sayers.