Slashdot Mirror
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."
So does Red Hat have the way out or the way in?
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.
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?
------
Today's Top Deals
Certainly better than Microsoft, which is 90% lawyers.
The speed of time is one second per second.
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.
It may just be that building large publicly traded coporations is not the way to go with open source software.
I'm no economist but I see no reason why this should be a terrible thing.
Personally I don't care how corporations fare. I care how individuals fare.
If individuals can succeed, without a corporation then I think that is better anyway. Large organizations tend to carry along overcompensated freeloaders. (Read CEO, CFO, etc.)
I would like to see an economy where individuals are compensated on their merits.
Like I said, I'm no economist and I don't have all the answers but I don't understand why I see articles that intimate that Open Source may fail because it does not work with the old business model.
In my eyes it is the old business model that is failing and a new one needs to be found.
.
It's hard to believe that's how Micronians are made. Why don't we see it right now by having you both kiss one another?
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.
I like music
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).
I spent half the article waiting for the writer to provide some facts, but by the end, there still weren't any.
She says:
Does this mean RedHat is moving all their employees to the marketing department? Does it mean everybody is told to make 9 cold calls a day? All we're given is the typical investor information, share price, projections, etc., but little information about how the business plan is working or changing.
Frankly, the few real facts that are provided show a mixed bag, hardly worthy of the article's pessimistic title. Yet another Linux story trying to make news rather than report it.
There is no need to use a SlashDot sig for SEO...
Isn't that just the regular distro without all the man pages and howtos?
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 ?
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.
If they were to get a hold of Openmail, they really might be able to slash MS right out of the server space - as long as they could keep MS from messing with the protocols.
AFAIK, Exchange is the number one reason to have MS anywhere near the datacenter.
"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."
:)
Eventually, this was going to happen. Sure, using 90% of the employees is kinda harsh, but IMHO RedHat's going to have to push at the big iron if they plan on making any sort of success. MS and everyone else is banging on the doors of big server farms already.
Maybe they could hire Brian Valentine to give their sales staff a boost and some spin-doctoring. Just imagine him being a Linux advocate.
/*drunk.. fix later*/
I guess it would make an easier move for a corporation to go from Unix to Linux, but imho Linux's real threat is MS/Unisys, not Unix.
You're half right. It is relatively easy to go from one of the high end flavors of UNIX to Linux. Reliable, familiar software at close to zero licensing costs that takes advantage of in-house UNIX experience is a no brainer decision for any corporation in that situation with a CIO that has a clue.
The second part is reversed. MS has been hoping to climb up into the server room from the desktop, leveraging the dominance of various complicated lock-in file formats and protocols it owns at the desktop. It's been partially successful since Intel compatible hardware is cheaper relative to traditional high end UNIX RISC platforms. And, with Win2K, they've finally got reliability up to the point where they aren't laughed out of the room.
But Linux is MS/Unisys' real threat, because while they focus on trying to climb up into the lucrative high end of the server room, Linux is coming up from behind, offering an even lower cost option than MS on Intel.
If I were MS, I'd see the biggest problem being high end UNIX shops tunneling through the mid-cost option of Wintel to the even better option of lowest-cost Lintel.
"Provided by the management for your protection."
We bought some copies of RedHat because we needed the support.
We recently switched all of our hosting equipment from M$ to RehHat (thanks largely to yours truly and the M$ machines' continued insistance on crash-and-burn computing).
The problem for RedHat is that I can get more and better support from #linuxhelp (take your choice of IRC undernets), Linuxdoc or just about anywhere else than I can from some guy at the corporation. I know the OS, and it doesn't take much time to find answers to stuff I don't know.
When I start trying to do undocumented stuff or I start having bizarro problems with the JVM, shared libraries or something else then the RH support guys don't know as much about the problem as I do.
I want to go to people who write the kernel, the libraries, the product or whatever isn't working and ask them. Online. For free.
I think the comments about going to a "club" style support system makes a hell of a lot more sense.
My $0.02 will always be worth more than your â0.02, so
Exactly.
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.
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.
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.
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).
As the Internet becomes more interwoven into business, business will decentralize. As business decentralizes, wealth and power will decentralize.
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.
Being a student at NCSU, home to RedHat's new corporate offices, I had the privelege yesterday of sitting in on a presentation by Matthew Szulik, CEO of RedHat. Though his presentation was on entreprenuership in NC, the talk quickly diverged into discussions of Open Source and how in the heck they plan on making money. I took the following things away from the lecture:
1) Szulik is a decent guy. His message of measuring entrepreneurial success in social terms instead of the quarterly shareholder statement was quite refreshing. He honestly seems to embrace the ideals of Open Source.
2) He stated during the lecture that despite having spent less than $1 million on advertising, RedHat is the 12th most recognized brand name in technology. Though the N&O article may suggest that 90% of their staff is in marketing, it probably suggests instead that they are simply working at making RedHat a better replacement for Unix (this takes marketing AND coders).
3) A number of skeptical members of the audience asked how they would ever make money. There were two answers: subscriptions and services. IBM is the best example of the tremendous market value of services, however Matthew spent more time on the subscription side. Let's be honest. Your average sysadmin doesn't want to have to deal with package management and keeping a system up-to-date. The RHN is a step in the right direction for managing the herculean task... it worked for me. I paid them $60 for a priority membership and I'm most pleased with it.
RedHat's staff :
90% marketing
09% coding
01% managing
You can make fun all you want. But I think that's the way to go.
90 percent of hatters are not marketing people. I don't know where the article got that statistic, and would be quite interested in knowing.
Most of Red Hat's revenue does not come from selling the box set, but from other sources; check out their last quarterly report . Not that the company doesn't make money on people buying the box, but that's not the companies largest revenue stream. Red Hat is a service company and it makes sense, stratigically, to target enterprise customers; they have very deep pockets and are willing to pay for an all encompassing solution, including services like consulting and support. Unlike you and me, aka the cheap bastards!! Well, I don't know about you, but I'm definitely one. Pay for software, you must be mad! Sorry little rant.
As for the fact that Red Hat is targeting a Uni* to Linux migration. Well, some people will disagree with me, but Linux, even with all it's graphical user stuff, is not ready for my Grandmother to use. It's getting there, but I don't think it's there yet. So if a large chunk of the population is unable or uninterested in your software, who do you sell it to? Is it reasonable to think that the people who would be interested in Linux are people who are already interested and are using Uni*? The two are very similar and it's far easier for an administrator or developer who is familiar with Uni* to switch to Linux rather than one who is used to Window$. Corporations have been employing Uni* for quite some time and have been paying people like $un a hefty price for hardware, OS, and support. In the current economic climate, I think it's a great strategy for a company to move to a lower cost IT solution. Why shouldn't Red Hat be the people to turn to? I say kudos Red Hat!
-Runz
And yet what has it done for consumers? Relatively little.
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.
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.
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.
which doesn't typically boost investor confidence. In late March, Chief Executive Officer Matthew Szulik filed to sell 425,000 of his shares after filing to sell 600,000 shares in February, according to documents filed with the U.S. Securities and Exchange Commission. Company co-founder and Chairman Robert F. Young has unloaded nearly 700,000 shares so far this year, part of a plan in which he sells shares automatically on a daily basis.
When the founders/owners/top execs of a company start dumping shares, that's not a good sign. These guys know how the company is really doing.