Red Hat Sales Surge

head_dunce writes "Red Hat has reported earnings from its third quarter, and it did quite a bit better than expected. Even with the movement within the business by Oracle and SuSE/Microsoft, Red Hat came out quite a bit ahead. TheStreet.com reports on the company's $29.6 Million dollars windfall, and some of the tough times the company has had in the past year. From the article: 'CFO Charlie Peters said on a conference call with analysts that the company is "cautiously optimistic that competitive efforts by some of the largest technology companies in the world are actually expanding our opportunity."'"

Comments

Make up your mind

[ArcherB]

Has the Desktop Linux Bubble Burst? Now this?

Well which one is it?

The weekend is coming and I need to know what to believe!

Re:Make up your mind

[someone1234]

Maybe Redhat Enterprise Linux is not specifically for the desktop?

Re:Make up your mind

[sammy baby]

I suspect that since very few people are running RHEL on their desktops, there's no real contradiction here.

Re:Make up your mind

[Kelson]

Has the Desktop Linux Bubble Burst? Now this?

Unless I missed something, the article doesn't break down the figures into server and workstation. It's possble for the surge to have been an even mix, mostly desktop, or -- more likely -- mostly server.

No need to freak out on contradictory reality just yet.

Re:Make up your mind

[Kelson]

Yes, they still offer workstations.

Red Hat Enterprise Linux WS

Ideal for power users and a wide range of high-performance technical client applications such as visualization, software development, and engineering design. Red Hat Enterprise Linux WS supports large-memory client systems with up to two CPUs.

Red Hat Desktop

Designed for general users who need a variety of software from email to web applications. Red Hat Desktop is designed for volume deployments that require a secure and centralized management infrastructure for client systems.

Re:Make up your mind

[Anonymous Coward]

There is about 50,000 of us running RHEL inside IBM.

Re:Make up your mind

[hdparm]

+1 over here, unrelated to IBM. It really is very good product. With DAG rpm repo, it makes beautiful option for mass market, too. I have no idea how nobody (big PC sellers I mean) came up with that one yet.

not surprised

[theMerovingian]

I hear membership is booming.

Re:not surprised

[bubulubugoth]

Never heard of Red Hat society...

Followed the link, and a nice and informative surprise.

I think my mom will care more about Red Hats from now.

Are we still angry with them?

[Anonymous Coward]

I can't remember what the slashbot stance was on RH??

Re:Are we still angry with them?

[Rosco P. Coltrane]

You're two episodes behind. It was SCO, now it's Novell. You gotta stay focused man!

Re:Are we still angry with them?

[spun]

What we need is some clear cut way of knowing who to hate at the moment. It wouldn't take long, probably not more than two minutes...

[KNOCK, KNOCK, KNOCK]

Yes?

Who we hate at the moment? I didn't mean that! I know we've always hated Novel, let me go! I'm a loyal Slashbot, I tell you!

Re:Are we still angry with them?

[Kelson]

I think we're supposed to scream and yell about how they're a money-grubbing Corporation (with a capital C) that never did anything for Linux, while ignoring all the @redhat.com addresses on contributions to the kernel, RPM (which, like it or not, *is* used by other distributions), various config tools (which, while no one else seems to be using them, are available for other distros to use if they want), debugging, funding of various projects, etc.

But apart from the sanitation, the medicine, education, wine, public order, irrigation, roads, a fresh water system, and public health, what have the Romans^W^WRed Hat ever done for us?

Re:Are we still angry with them?

[drinkypoo]

I'm both angry at them and happy that they exist. I'm angry enough not to use Redhat Linux, because of what they did to the free RedHat scene - turned it into a legion of beta testers. I'm happy about all the money they spend on various open source projects. Of course, RPM is a giant pile of shit that should never have been invented - who is the fuck-ass who thought up using cpio with a fucked up header on it so you have to use dd (or something) before you can even manually unpack the archive? He needs a serious ass-kicking. But that's a digression and something I can forgive them for :)

They've clearly done a lot for linux and OSS in general. It doesn't mean I have to like them. They're not doing any of it out of altruism. They're doing it because it makes good business sense. I'm supporting Ubuntu instead, because they're making actual promises not to change the entire way they do business overnight.

Re:Are we still angry with them?

[rawtatoor]

Why is using redhat users as beta testers bad? Redhat makes its money off of companies and the fanboys get redhat for free, plus they get to take part in development.

However, RPM is wronger than nuns in a tampon commercial.

Must be all the Santas

[DrLZRDMN]

I mean think about it folks, Christmas is but a few days away and sales of "red hat" are surging.

numbers.

[sammy baby]

Wanna see the actual numbers? Red Hat's report to investors is here.

Is it just me, or did they spend almost twice as much on marketing as they did in the same quarter, previous year?

Re:numbers.

[Silver Sloth]

Is it just me, or did they spend almost twice as much on marketing as they did in the same quarter, previous year? Yes, that's what the figures say, and maybe an increase in marketing is the driver for the increase in turnover. However I'm more impressed by the line below

Sales and marketing 37,575 20,505 105,883 61,296
Research and development 19,200 9,644 51,084 29,846
General and administrative 18,024 12,357 49,579 34,067

which shows a greater, in %age terms, increase in R&D, and the next line which shows an much smaller increase in 'General and adminstrative'

It seems to me that a company concetrating on R&D and marketing is one which is healthy. The (dis)organisation I work for seem to have got that one arse about face!

Don't lump...

[Alcibaides]

People love to lump every distro under the sun together. There are significant differences. After all, not ALL are in bed with Gates, right?

This might have something to do with

[superwiz]

how bad Suse has been lately. Despite all the deals they made with MS (recent news) they have a bigger problem. Suse has become fundamentally bad. 9.3 was great. 10.0 was ok (but much worse than 9.3). 10.1 can only be described as unbearable (wouldn't even install half the time). And 10.2 tried but couldn't really to improve on 10.1. FYI, it does install now... after days of synchonizing package information with suse website. Google search for "suse 10.1 sucks" yeielded more hits than I cared to count. Debian is having internal infighting. Until the dust settles, RedHat is all that's left.

Re:This might have something to do with

[morcego]

RedHat has a release plan, and they won't deviate from it. In any case, RHEL 5 is already in advanced beta stage.

I really don't know what you mean about 2.6.9-EL getting in the way. True, it does use mostly 2.6.9 API/ABI, but not strictly (as anyone how tried to compile some external kernel modules, like ieee80211 and ipw2200 have found out), and also contain lots of updates. The only external driver I use is ipw2200, and that only because I wanted monitor mode. And, since I was already recompiling it, I went the upgrade path as well.

Many people see 2.6.9 and think: "OLD!". That is really not the case. Using the latests version on any production server is very dangerous. In any case, "STABLE" beats "NEW" every time in my book.

Lastly, please remember it is 2.6.9-EL, and not 2.6.9. They are very different beasts.
Please read "speaks backport".

Re:This might have something to do with

[ronanbear]

That's nothing. Microsoft waited 5 years and they're pretty profitable. Applications do far more to sell OSs than the other way around. Growth takes time at first but goes through phases. Red Hat has a lead because it is good at what it's supposed to be doing.

UNIX

[MichaelSmith]

Every single site which I know has moved away from Tru64 unix has gone to RHEL or a close derivative of it. Maintaining those systems 5, 10, 15 years into the future is going to deliver a lot of work to RedHat.

Re:UNIX

[protohiro1]

My team is going to be migrating 600 servers from bsd to RHEL in 07...and I know we are part of a trend. I think a lot of people are moving from Solaris et al to linux but still want support.

It's too early to discount Oracle/MS/Novell

[nortcele]

Those of us that work with the RedHat products will note that not all things are as they seem. Our company feels that we are not getting value for what is paid. Our loaded cost for a Windows machine is cheaper than that for Linux. I'm a die hard linux evangelist, but the numbers don't lie. Linux makes for better servers, and Windows for a better desktop (for now). Redhat changed their licensing for RH8 to RHEL3 right while many corporations were in mid-stream of adopting RedHat Linux. Corporations cannot change course that quickly so all this money RedHat made is from businesses following the corporate plan developed pre RHEL3. Our company adopted RedHat as our Linux standard based on RH8 and the costs at that time. Many company plans and projects began to be based on the use RedHat Linux. RedHat blind-sided us with their licensing change and it didn't make many here very happy. Corporations don't like uncentainty, thus the initial choice of RedHat instead of a less stable distribution. We really don't need the support. It's sort of like a security blanket. There... but really not needed.

We are a large enough company to be nearly self-supporting on Linux issues. Thus the RedHat cost per RHEL3/4 Workstation license is out of line for us. The only feature we need of the RedHat server is multiple CPU and memory capability. We don't use GFS or any of the other stuff. So the $1k server cost is WAY out of line. All the RedHat support we sometimes use are the updated RPMS for the distribution. Yet RedHat seems pretty oblivious to this until recently. We have bought more licenses in the last half year than all previous. Many of our data crunching processes are moving from Windows to Linux (Linux is fast and perl/python work better there.) Yet... we are unhappy with the perceived value. We paid RedHat enough last year that we probably should have just hired Linus to come work for us and gone with Fedora or Whitebox.

My point is this. RedHat is too expensive for what you get. Oracle and MS/Novell smell opportunity and have only begun their campaign. When Oracle comes out with their version of Linux, watch RedHat get completely ejected from corporate use as Oracle database servers (the $1000+/yr cash cow licenses for RedHat). When viable alternatives become available, will we evaluate them? Oh yeah.

Re:It's too early to discount Oracle/MS/Novell

[Anonymous Coward]

When viable alternatives become available

And there in lies the key.

Oracle is not viable, their CEO does not support open source and has made it clear that you don't put value into open source because then your competitor has the same value.

Microsoft is not viable, do I really need to go into this one, just read the many press quotes from Microsoft's CEO.

Novell is somewhat viable, but they've been selling SuSE for a few years now and haven't presented much competition for Red Hat. In addition I supsect the Microsoft deal will do more to scare away customers rather than bring more into the fold.

Corporations don't buy into linux for altruistic reasons, they buy into it because it makes business sense. That said it doesn't make sense to purchase linux support from a company that has made it clear that they intend to destroy open source as a competitive strategy when your own business relies on open source solutions. Most decision makers are going to look at statements coming out of Microsoft and Oracle and they'll know that they are not the proponents of open source that they want their businesses to depend on. Red Hat is just about the only true open source enterprise level support available.

I think you have some valid points concerning the changes Red Hat made and to this day I think they are missing out on some easy revenue with smaller companies/individuals that need an inexpensive support solution, but some of what your saying doesn't make sense.

You see no value in Red Hat's services, yet you continue to buy them.

You see Windows as a cheaper solution, yet you use Red Hat linux.

You can support linux yourself, yet you want to hire Linus so you can use an unsupported distro.

There must be more value there than you personally see because not only is your company expanding their use of Red Hat's services but so to are many other companies.

Re:It's too early to discount Oracle/MS/Novell

[Chandon Seldon]

Another one of the unique abilities of FOSS is the fact that it allows you to rely on the work of others. Rather than screwing around with Linux From Scratch (which is an amusing thing to do once as a hobbyist, not a serious business solution) it's perfectly possible to chose another Linux vendor with a better product pricing model... say Canonical with Ubuntu. If they're more attached to the Red Hat model than they are to decent external support, something like CentOS might be appropriate. There's no need for people to be hand-rolling their own distros.

"Support" model seems to be a misnomer

[FallLine]

It seems to me that, contrary to the vision espoused by RMS/GNU/etc, most of these companies which are based around-GPL products truly aren't making their business by selling "support", i.e., actual people delivering support by phone, in person, or by other electric mediums. "Support" instead has devolved into the fairly convoluted idea of delivering a stream of updates while the other GPL/Linux companies really depend on selling closed-source licenses to their GPLd products (e.g., MySQL). I'm glad Redhat is succeeding thus far, but it seems to me a fairly unsustainable business model given the realities....

It seems to me that is only a matter of time until one or several happen:

A) RMS/GNU will complain that Redhat is violating the spirit of the GPL by not providing 100% equal access to free-loaders and then change the GPL

B) One or several competing corporate entities will successfully be able to offer the same updates (so-called "support") by free-loading off Redhat's efforts...

C) Redhat will be forced to include some proprietary software that will truly seperate them from the free-loaders...

Either way, the system seems unlikely to generate the kind of revenues needed to pay for massive improvements to the open source components of the linux platform over the long term... without some pretty fundamental shifts at least.

Re:"Support" model seems to be a misnomer

[Junta]

I think also saying they make their money from "support" may be a strong word, but it isn't so far off, they make money by selling the promise of support. I've seen numerous installations where the organization deploying knew for all practical technical reasons, they could go with either RHEL or CentOS and have the same experience. However, they were willing to pay for the support contract they more often than not never use.

This is not new to the business, or even the *nix world. Few years back I was part of a Solaris admin team. Before I joined, they already subscribed to a really expensive SMB server product for Solaris, which charged ungodly amounts monthly for even just a 2 concurrent client access license. I recognized that users were understandably upset over being 200 people who could rarely access their files from their windows boxes unless their department ponied up funds for a commercial nfs client for windows. I suggested samba as a viable alternative, but was denied because they couldn't possibly call for support at the time. I asked if they had ever actually called the vendor for support, and the answer was no, but they perpetually lived in fear of having to, so they paid the exorbitant fee.

It *seems* like they are selling an essentially free product hoping no one will notice, but the customers are mostly damn well aware of the free alternatives, and they make the conscious decision. Liability in a sense of the word is applicable. If IT uses their budget such that they have a couple more servers with money saved from not buying RHEL licenses, no one will notice or give them praise. However, if it hits the fan, even if the technical result ends up the same, if CentOS was installed, the finger pointing stops at the IT dept, if RHEL was installed with support contract in place, IT can redirect the finger to RedHat as not delivering on promises if it comes to that

As to your points:

A) RMS/GNU will complain that Redhat is violating the spirit of the GPL by not providing 100% equal access to free-loaders and then change the GPL Not likely, CentOS is the perfect counter-example that RHEL is following the GPL fine and the license is working as intended without loopholes. RedHat hasn't been overly noisy, but some acts they've done clearly demonstrate they aren't keen on the existence of CentOS, but accept they can't do anything about it.

B) One or several competing corporate entities will successfully be able to offer the same updates (so-called "support") by free-loading off Redhat's efforts... That is in essence what Oracle is doing. That's one of the scary competitors that RH has been talking about. If they were too successful in impairing RH's ability to fix the core stuff, they must either pick up the slack themselves or the product will perish (much like a parasite that gets too greedy will die when the host is killed). Too soon to tell if this relationship ends up parisitc (but perhaps mostly harmless) or symbiotic.

C) Redhat will be forced to include some proprietary software that will truly seperate them from the free-loaders... At one point I know RH shipped with the package some extras, including a JRE. Don't think they've done anything serious yet outside of GPLed projects. That does seem like a reasonable path if Oracle or Novell start achieving overwhelming success and RH is finally forced to differentiate themselves from the competition on a technical level.

Re:"Support" model seems to be a misnomer

[burnin1965]

A) RMS/GNU will complain that Redhat is violating the spirit of the GPL by not providing 100% equal access to free-loaders and then change the GPL

B) One or several competing corporate entities will successfully be able to offer the same updates (so-called "support") by free-loading off Redhat's efforts...

C) Redhat will be forced to include some proprietary software that will truly seperate them from the free-loaders...

Either way, the system seems unlikely to generate the kind of revenues needed to pay for massive improvements to the open source components of the linux platform over the long term... without some pretty fundamental shifts at least.

A) RMS/GNU will not likely complain about Red Hat not living up to the spirit of the GPL because they do. The GPL is about access and redistribution of source code, all Red Hat's contributions to linux are open source, everyone has access and can change and redistribute the code. Your confusing Red Hat's network and personell resources people pay for to provide updates, installation support, and training with the source code coming out of Red Hat and available under the GPL.

B) While anyone can setup a business to deliver Red Hat's updates at a lower price, i.e. Oracle, its not likely that most Red Hat customers will be foolish enough to fall for fake open source proponents to provide support to the open source solutions their businesses depend on. Oracle and Microsoft are not a threat to Red Hat because they are obviously against open source and contrary to supporting it would actually like to stamp it out when it appears threatening to their primary business models.

C) Rather than Red Hat being forced into including proprietary software in their code base its more likely that customers will demand that other vendors support Red Hat by either developing and testing their proprietary products on Red Hat or by open sourcing their proprietary product so the community can provide the value of open source developement to the customer and the customer's vendors.

And either way, arguing that costs of developing linux and its components outstrips any possible revenues is a weak arguement considering linux came from $0 revenue to a serious competitor now generating billions in revenue. Yes I said billions. Red Hat is a small part of the linux market, there are several other vendors, IBM, Dell, HP, Novell, etc. who are making hundreds of millions off linux as well. Server hardware sales of linux based machines alone is over $1.5 billion a year.

Re:"Support" model seems to be a misnomer

[morcego]

Yes, to a point. However, we are using the Red Hat name right now in our comments. This sort of dialog is being forbidden by Red Hat on CentOS' web site as well.

Actually, I was not required to go that far, even tho the CentOS people did go to some extra mile.

The main problem was that, on the main (front) page of the site, it was being said that CentOS was a RedHat clone or something like that (I don't recall the exact phrasing). Also, there were referenced to RedHat on the CentOS documentation.

What really called this problem to attention was the reference on the front page. Of course the people at RedHat knew about the various referenced to RedHat all around, but RedHat (the company) had to do something when you started searching for RedHat on Google, and would get some CentOS pages.

I'm also very glad both exist. I would still use RedHat ( I think ) if CentOS didn't exist, but not on all my boxes. On some (where I use CentOS), I would use some other distro, which could have led to a site-wide change of distros.

I basically used RHEL when I need warranty and/or certification. Oracle servers, critical data clusters and such. On other places, I use CentOS (including my home machines and notebook).

On the other hand...

[MAXOMENOS]

...Mark Shuttleworth is making it very clear that Ubuntu is a for profit venture. He could very well start charging money for something soon, and end up ticking off the Open Source world the same way the heroes of a decade ago (Red Hat) tick you off now.

If you want purity of purpose, you'd be best off with Debian, and good luck with it.

Re:On the other hand...

[fdfisher]

I 2nd this statement. In fact, Mark Shuttleworth and Ubuntu have already begun doing things that undermine the idea of free software. For example, Ubuntu now ships with binary blobs in the kernel, non-free wireless drivers, and proprietary nvidia drivers (for which free alternatives readily exist.) See Scott James Remnant's blog for details. Likewise, it's been reported and substantiated that Mark Shuttleworth is preventing the Debian GNOME maintainer (who also works for Canonical) from updating GNOME packages until after Ubuntu LSO had shipped. Of the two top committees governing Ubuntu, the Ubuntu Community Council and the Technical Board, are both made up of Mark Shuttleworth and people he employs, and Shuttleworth has been given "benevolent dictator for life" status within the project. A lot of people do not trust Shuttleworth either, and some, such as Debian Developer, Otavio Salvador, have made comments like, "what he says and what he does are different." You should be wary of supporting Shuttleworth's efforts as there's good reason to question his commitment to the ideals of free software and to the interests of the rest of the community.