Red Hat Set To Surpass Sun In Market Capitalization

mytrip writes "In what may come to be seen as a deeply symbolic moment in the history of operating systems, Red Hat is on the verge of surpassing Sun Microsystems' market capitalization for the first time. Sun, perhaps unfairly, represents a fading Unix market. Red Hat, for its part, represents the rising Linux market. Given enough time for its open-source strategy to play out, Sun's market capitalization will likely recover and outpace Red Hat's."

Comments

The sum of Linux vendor capitalization

[Facetious]

The makes me curious. If all Linux vendors had an equivalent of publicly traded market capitalization, what would their sum total be? Naturally it would be lower than Microsoft's $153B (as of this morning), but that isn't bad considering Linux can be had for free. (BTW, I remember back when msft's market cap was over $400B).

Thank you Sun

[rlp]

I for one hope that Sun not only survives, but prospers. Sun has greatly contributed over the years to the development community, particularly FOSS developers.

Re:Thank you Sun

[aliquis]

Personally if I got to choose one of either all of Suns knowledge, experience, code and products or Redhats I'd for sure go with Sun.

Obviously the market works differently =P

Re:Thank you Sun

[InlawBiker]

Sun has been a great innovator, but when they were the only game in town they charged obscene prices for their products and services. It helped open the door for Linux and Sun has only itself to blame.

When you walked into a data center ten years ago all you saw were Sun servers. Where I work now I'm hard pressed to find a single Sun box anywhere.

Re:frist psot

[Hognoxious]

A thousand and one posts saying that it's illegal/immoral/impossible to make money from open source software will be along soon.

They'll be followed shortly after by sevaral thousand more complaining that all corporations are evil and should be banned.

In turn those will be followed by several million arguing that google are/aren't evil, or disputing the subtle nuances between doing evil and being evil.

In other words: normal service will be resumed as soon as possible. The tuna salad is off, by the way.

A relatively unimportant event

[fishwallop]

I fail to see why this is a "deeply symbolic moment in the history of operating systems" and not merely a moderately interesting moment in the corporate history of the respective companies (or, more specifically, in Red Hat's corporate history). Red Hat may represent Linux, but it's not Linux, and market capitalization, being a function of share price, is a less interesting metric then any measurement of the actual use of the operating systems these companies produce. Anyone who remembers the Red Hat IPO will know that share price is more closely tied to hype than to particularly signficant tecnical advances.

Wrong.

[AltGrendel]

Definition - Market capitalization:
an estimation of the value of a business that is obtained by multiplying the number of shares outstanding by the current price of a share

Re:Wrong.

[QuantumRiff]

I understand that. I was asking if looking at the market capitalization really said more about how the company was doing than its sales numbers? Do we now judge the success of tech companies by looking at what non-technical financial people think the company might be worth in the very short term?

Really, I think it says more of the "investors" that they think a company with sales of 700M a year should be worth (in market capitalization terms) the same or more than a company with sales of 13Billion a year.

Re:Wrong.

[Estanislao Mart�nez]

That is largely right, except for one detail: Red Hat is producing profits, but Sun recently posted a big loss, mostly due to a 1.45B impairment of goodwill charge. (In English: they revised their estimate of the value of some of the companies they've purchased, down 1.45B).

To answer the original thread poster's question: it's not how much you sell, it's how much your keep.

Re:Wrong.

[ceoyoyo]

It's almost as silly as judging a company by it's gross sales.

What you're looking for is PROFIT. Sun's profit was 88 million, or 11 cents per share in the last quarter (down 73%) while Red Hat's profit was 24 million, or 12 cents per share, up about 7%. Sun is forecasting that they will lose money over the next year, while Red Hat is forecasting (and analysts agree) that they will continue making money.

Sun still made more money than Red Hat, but even Sun agrees that's going to change.

Further evidence...

[AKAImBatman]

...that marketing trumps technology. Sun has some incredible tech and even delivers x86 servers at highly competitive prices. Yet because Sun's marketing sucks worse than a black hole, generating new customers is a huge issue for them. As far as I can tell, the vast majority of their business is still through customer reps with little attention paid to the market as a whole.

I personally think that Sun could be successful in quite a few areas of the market. Not the least of which is as a serious competitor to Dell's server business. But first, Sun has to figure out how to communicate with the average customer. Giving their software complex prefixes like "Sun Java System", branding everything with "SPARC" even when it isn't SPARC, changing their market ticker to JAVA, and giving up on new markets before they've made inroads aren't exactly painting Sun in a positive light.

Dear Mr. Schwartz: Please hire a real marketing department and see to it that your product line makes sense to the average consumer. KTHXBYE.

Re:Further evidence...

[eln]

I agree, but it's not only marketing. Sun has apparently decided to go into the support and commodity hardware market. In commodity hardware, margins are razor thin, so they really have to distinguish themselves. In my recent experiences with Sun x86 systems, quality has been something of a problem. They say it was a temporary issue with one of their plants in Mexico, but when we ordered a ton of x86 boxes about a year ago, it took much longer than it should have to get to us, and the failure rate was unusually high.

Also, when they released the x4100 Mk2, they claimed it was virtually identical to the Mk1, and there would be no issues. However, it turns out they made some fairly significant changes such as changing the vendor of the on-board network cards to one that the OS image we were using at the time had no support for. It also had a different type of PCI port (PCIe versus PCIx, IIRC), which meant all of the extra NICs we had lying around were suddenly useless. Had they told us of these changes, it would have been no problem. Instead, they just told us our order was being changed to the "virtually identical" Mk2, and we had to scramble when we got them. Not great customer support there. After that incident, we actually stopped using Sun for x86 hardware entirely.

Going back to marketing though, they are really pushing this "Open Systems" thing, which is nice and all, but their salespeople don;t know how to sell it. At a recent presentation, the Sun sales guy was talking up Open Systems, and a member of the audience asked, "If everything is open and interchangeable, why shouldn't I just use your free open source software and go buy a cheaper system from Dell? What is the advantage of your box, if it's commodity like the rest? Why should I buy from you?", and the sales guy had no answer for him! He actually stumbled over his words for about 30 seconds, at one point actually saying there was "no reason" before one of his colleagues finally pipes up with something about "end to end support".

Maybe they need to be touting the end to end support first, and the open systems stuff second. Suits tend to like open source because it's a lot cheaper, not because they're big on the philosophy, so stop pushing the "open source" thing so hard when the open source bit is the part you're giving away for free. Market the entire platform as an end-to-end solution, and throw in the open source part as an aside. Sun's marketing team doesn't seem to get that.

Anyway, that was a bit long-winded, but the point is that Open Source isn't going to save Sun by itself. They have more problems, and I see them surviving as a much smaller and less interesting company than they are today if they stick to the path they're currently on.

If Linux is how much can be made free...

[thtrgremlin]

... then Linux market capitalization is how much software that previously cost money was made free, so if Linux can be considered directly responsible for killing Microsoft, which I think is some peoples objective, that puts their market capitalization at $400B - $153B = $247B. That means Linux has 1.6x the market capitalization of of Microsoft just in Operating Systems! That doesn't even begin to include all the other great FlOSS out there.

Add to that the average wage of a software engineer times the number of man hours contributed to FlOSS, and you can quickly see how Microsoft is getting its butt kicked!

I love the new math!

Don't give that much credit.

[jellomizer]

SUN's market was traditionally on High End equipment. Standard PC hardware has been getting to the Good enough category, and replaceing the need for the high end stuff. Even if the high end stuff today is that much more high end, we are reaching a point where we need less high end equipment.
the 80's almost every major university had its own super computer. 90's they had a mainframe, 2000's they have high end microcomputer based servers.
SUN product line has been between mainframe and microcomputers. Now their new stuff is either to much for what people need to too expensive for what you get.

Linux growth has always been fasted with the Unix Corps who are upgrading to a new network, and it is way cheaper for a Unix corporation to switch to Linux (or Old Unix to New Unix) then to Windows. (Windows to Linux costs a lot more).

Re:Riiiight . . .

[tnk1]

Thoroughly unlikely. Sun would be bought out long before they needed to declare bankruptcy. Their star may not be in ascension, but the company has real value.

Bad marketing

[Jim Hall]

I for one hope that Sun not only survives, but prospers. Sun has greatly contributed over the years to the development community, particularly FOSS developers.

Sun has certainly contributed many highly-visible projects that we just take for granted these days: NFS, OpenOffice, Java, GNOME, etc. And ZFS is very powerful, but hasn't really made it to other places yet. However, it just seems Sun doesn't know what to do with it, or how to market it.

A few years back, I got to visit Sun for an executive briefing. We met with a lot of higher-ups at Sun (including Scott McNealy.) I repeated to whoever would listen that Sun needed to get their act together: Figure out an (easily-understood) strategy for Sun and FOSS, and move with it. Separate the hardware and software marketing; and at the same time, let me choose systems "menu-style" just like buying a Dell. Simplify your product lines and marketing. Release a consumer-based UNIX distro for commodity PC systems that has the polish of Linux (the apps are there - Firefox, OpenOffice, etc. - so for 99% of the population that's the "compatibility" they need.)

Yes, Sun has done some of these things, but not in a coherent way, and certainly not in a simple way. Things are just too hard to go through Sun.

Sun needs to get organized if they want to remain competitive.

Re:frist psot

[Z34107]

A thousand and one posts saying that it's illegal/immoral/impossible to make money from open source software will be along soon. They'll be followed shortly after by sevaral thousand more complaining that all corporations are evil and should be banned. In turn those will be followed by several million arguing that google are/aren't evil, or disputing the subtle nuances between doing evil and being evil. In other words: normal service will be resumed as soon as possible. The tuna salad is off, by the way.

Wow! The Readers Digest version of Slashdot!

Re:Riiiight . . .

[Sun.Jedi]

First, in a friendly way ... nobody gives a rat about workstation class machines. Any fool can dump Ubuntu, Fedora, Windows, BSD, OpenSolaris, or whatever, and google up enough support/fun tools to get the job done and post on /. on most any cheap-ass 2 year disposable wintel capable machine.

So, on server class machines... number 1 reason: Support contracts.

Sun is one stop shopping; hardware and software by the folks that make it. Dell also supports RH linux through their customer care center, and I'll assume that HP/IBM do as well, but they are not RedHat, they are $vendor with RH knowledge and expertise. Thats a separate subscription to get RedHat support and you then get the RHNetwork portals in addition to standard phone support. So you pay twice (1 for $vendor and 1 for RH), and it ain't cheap as Sun's.

Number 2 reason: Reliability.

SPARCs just don't die. When they do, its very pretty of course, but it just doesn't happen as often as Intel/AMD architectures do.

Also, Suns do not often have the compatibility problems that Intel/AMD arch's have. By compatibility, I mean the mobo + raid + firmware + kernel version + PCIx firmware + BMC version = "unsupported" type compatibility.

Fact is, I've been admin on Sun's for nearly 15 years, been through the really bad 5/7 releases and lots of other SUN 'badtimes'. hey are nothing like the hassles I have to go through daily with AMD/Intel arch's. I'm in a 4:1 Sun:Intel/AMD shop, and have a documented (ticketing system) 5:1 Intel/AMD:SUN hardware problem ratio.

Yes, my alias is 'sun.jedi', I've worked on Sun's a long time. This was not intended as a 'fanboy' post. I'm a beer/vacation fanboy before I'm a SUN fanboy.

Relative to what?

[DesScorp]

Sun has been a great innovator, but when they were the only game in town they charged obscene prices for their products and services. It helped open the door for Linux and Sun has only itself to blame.

When you walked into a data center ten years ago all you saw were Sun servers. Where I work now I'm hard pressed to find a single Sun box anywhere.

Sun was expensive compared to what? Windows boxes? Linux boxes that came later? Sun became the huge company it was because they were far more affordable than what IBM and Digital was charging in the 80s, and everyone ran to them. It's kind of hard to blame Sun because some guy in Finland came up with an alternative that ran on El Cheapo X86 hardware, and then gave it away to the whole world.