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Red Hat Support Continues To Flourish

Posted by ScuttleMonkey on from the focus-is-everything dept.

ruphus13 writes "As the pure-play Open Source companies continue to dwindle, Red Hat has thrived through the recession. Its support revenues have grown 20+%, and account for 75+% of its revenues. 'Instead of the traditional strategy of selling expensive proprietary software licenses, as practiced by the Microsofts and Oracles of the world, Red Hat gets the vast majority of its revenues from selling support contracts. In the third quarter of last year, support subscriptions accounted for $164 million of its $194 million in revenue, up 21 percent year-over-year. All 25 of the company's largest support subscribers renewed subscriptions, even despite a higher price tag.'"

16 of 215 comments (clear)

  1. Re:I don't buy it. by InlawBiker · · Score: 2, Informative

    A large enterprise would almost never deploy something in production without support. For my small consulting gigs I have never bought support. I think you can see where this is going...

  2. Re:I hate when names are pluralized to mean a grou by binarylarry · · Score: 3, Informative

    It means "and similar companies."

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  3. Re:I hate when names are pluralized to mean a grou by Anonymous Coward · · Score: 1, Informative

    http://en.wikipedia.org/wiki/Synecdoche

  4. Way to restate the summary, Cpt. Obvious! by spun · · Score: 5, Informative

    The summary: Redhat sells support rather than licenses
    You: With Redhat, you buy support
    Me: Duh.

    So the fact that people who use the software keep buying support for it is not that impressive.

    Um, duh? The article is not claiming, 'Ooh! Out of all the people who buy Redhat, look how many people buy support!' It is saying, 'Look how many people buy Redhat in the first place.' Redhat has continued to profit during the economic downturn, which is impressive. Come on, man, any hobbyist will use CentOS, or create their own update server, and/or download the patches and updates from another source. Any corporation or government will buy support. But they won't necessarily buy Redhat, in fact, most of them end up buying Windows, right? But enough buy Redhat to ensure Redhat's profitability. Which is the point of the story...

    --
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    1. Re:Way to restate the summary, Cpt. Obvious! by Third+Position · · Score: 4, Informative

      Any corporation or government will buy support. But they won't necessarily buy Redhat, in fact, most of them end up buying Windows, right? But enough buy Redhat to ensure Redhat's profitability. Which is the point of the story...

      Well, not necessarily. I work at a shop with over 1700 Unix/Linux servers. Yes, we also have Windows servers, but for applications that are running massive Oracle databases, Unix/Linux servers are still the only way to go. It's true Red Hat isn't the only Linux distro, but in terms of data center servers it's become pretty much the standard with Suse a distant second. There just aren't that many Linux distros that are enterprise friendly, Red Hat pretty much has a monopoly on the enterprise Linux market. So while Red Hat isn't a proprietary OS, it might as well be. Given that we've been replacing our Sun and HP Unix servers with Red Hat Linux hand over fist, Red Hat is making a pretty piece of change off of us, and I understand this is largely true in most shops. Our hardware is primarily HP and IBM, who are making up their lost sales in Unix servers to us by selling us Intel based servers for Linux (and Windows, too). That pretty much leaves Sun out in the cold - we're not buying their proprietary servers much anymore, and they never gained a foothold in the commodity hardware market.

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    2. Re:Way to restate the summary, Cpt. Obvious! by PopeRatzo · · Score: 3, Informative

      The fact that expensive software is so well supported is why people pay money for it!

      I think that's demonstrably false.

      Most people use "expensive software" because that's what came on their computers. Plus, that's what their job/school/family uses. Most people who use "expensive software" are probably not fully aware of the alternatives and/or have chosen not to take the time to learn.

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  5. Re:I don't buy it. by spun · · Score: 3, Informative

    Then you don't know that many people who use Linux in a production environment with management's approval. Here at New Mexico's Child Youth and Family Development Department, we pay for support. We pay Novell for Suse Linux support (we're a Netware legacy shop), we pay Oracle for MySQL support, and we have 'as-needed' support contracts for other important open source software packages like Splunk & OpenNMS.

    So, there you are. I pay for support. But I'm married, so I guess I'm not a 'single person who pays for support.'

    --
    - None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
  6. Re:To be fair... by 1729 · · Score: 5, Informative

    To be fair, Red Hat is capitalizing on the work of Linux developers.

    To be even more fair, Red Hat employs many of the prominent Linux developers, and is currently the biggest corporate contributor to the kernel. In addition, they're heavily involved with GCC and gdb, not to mention MANY other GPL projects.

  7. Re:I don't buy it. by networkBoy · · Score: 2, Informative

    What I think they do is get a kernel dev on the line if that's what it takes to resolve my issue (which is funny because my company has a couple kernel devs on the payroll).
    Seriously, they (RHEL) make their living by making my engineering department's life easier. We're predominately a windows shop, a fortune 50 company, but we also use linux a lot... and most of it is RHEL.

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  8. Re:To be fair... by Lemming+Mark · · Score: 3, Informative

    To be even fairer, Red Hat do employ a large proportion of the kernel and userspace developers for the software they make support income from - they even have a record of open sourcing code that they get from company acquisitions. But they are very much benefiting from the fact that it's easier to build an OS by co-operating with other companies and individuals than to go toe-to-toe with MS (and Apple, not that they're direct RH competitors in any significant way) on your own.

  9. Re:Because they haven't released an OS in 3 years by h4rr4r · · Score: 5, Informative

    If the old one works fine why would you need a new one?

    In the grownup server world we really don't need flashy new guis or other such silliness.

  10. A slight pre-emption. by MrCrassic · · Score: 2, Informative

    Linux, which is at the core of Red Hat’s software strategy, has never been a huge success on the desktop, and especially not on the business desktop. Red Hat officials have shrewdly maintained that desktop Linux is not a core focus for the company, but that virtualization and the facilitation of desktop and cloud operating systems applications are.

    As I know this will become a polarizing statement on this thread, let me try (try being the key word) to neutralize this quote.

    Red Hat is not implying here that desktop Linux is a failure (like it's subpoint headline apparently does). They are stating two important truths: (a) that Linux on the desktop has not taken off as much as some pundits have been forecasting for a while, and (b) that this goal is not part of their overall focus and won't be for some time.

    I don't agree entirely with this viewpoint, since Ubuntu and netbook-provided distributions have contributed to its significant increase in consumer presence. Regardless, Linux on the server is where it's at, and where Red Hat has had huge control over for quite some time. Thus, it's no surprise that they are flourishing at the moment, despite the current economic situation.

  11. Re:To be fair... by siride · · Score: 2, Informative

    I hope you were being sarcastic, because Red Hat gives a huge amount back.

  12. Re:Not Optional by ScytheBlade1 · · Score: 4, Informative

    I'm quite sure that Redhat's "support" model is designed to frustrate and confuse.

    You pay per server per year. That's not exactly confusing. Frustrating only in the sense that... you have to pay for it.

    Customer: "I'm a FOSS DEVELOPER! YOU'RE SELLING ME MY OWN CODE!"

    http://ftp.redhat.com/pub/redhat/linux/enterprise/5Server/en/os/SRPMS/
    No they're not. They're selling you binary packages and the ability to call them up at 2:30 AM to get your issues fixed. If you want your code, it is right there for you to download without issue.

    They can smugly tell me "see, software isn't free?" and feel much more comfortable signing cheques for $1500/year.

    The software is free. If they don't understand what they're purchasing, that's their problem, and only yours if you decide to make it your problem.

  13. Re:Because they haven't released an OS in 3 years by Anonymous Coward · · Score: 1, Informative

    Actually the release every 6 months 5.0 5.1 5.2 5.3 5.4. However, these release are designed to maintain compatibility.

  14. Re:Because they haven't released an OS in 3 years by Anonymous Coward · · Score: 1, Informative

    I'm working for a company selling financial software. One of the platform supported by our software is Redhat AS. Most of our customers just starting to migrate from AS4 to AS5.

    In fact, if RH released AS6 right now, it would take a year for us to qualify our software on it, and it will be years before our customers would event think about moving to AS6.