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

[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.

not surprised

[theMerovingian]

I hear membership is booming.

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?

[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.

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!

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".

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.

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:"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.

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.