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Dell Buys Equity in Red Hat
Lampropeltis Alterna
wrote in to tell us that Dell has bought equity in Red Hat.
Another hat has been thrown into the ring. I've always thought
of Dell as completely in bed with Microsoft, it'll be interesting
to see how they follow this up.
Posted by tirebiter:
t m
Well, yeah you can, actually.
Here's one of their URL's about it:
http://www.dell.com/products/workstat/isv/linux.h
"My Opinions Are My Own"
I'm a Dell owner (Debian runs like a dream), and one of the things I like most about the company is the documentation they include: everything you'd want is in the box. If Dell is a) moving towards offering Linux as a main-line OS and b) investing in RedHat to ensure that they can deliver a quality product, then it doesn't seem unreasonable for Dell to at least partly implement RMS's concept of free software, and pay the FSF to provide some documentation for their contribution to Linux. At least that way, it doesn't feel as if a corporate behemoth is exploiting the work of those who develop free software.
What I really hope to see from RedHat, given the cash they've been receiving from industry leading hardware and software companies is for them to continue to do what they've done with great coders like Alan Cox.
RedHat would be doing themselves and the community a great service if they used all this money to hire programers, programers already involved in open source projects, and pay them to do what they do best.
If RedHat could bring in more coders, working on GPL'd software, they could speed up development that is currently slowed by said programer's need to eat and have a place to live, and thus being able to afford less time spent working on their projects because they have a Real Job(tm) doing unrelated stuff.
I'm happy with the job they've done thus far in keeping their distribution OSS because we all bennifit from work done at RedHat.
Is anyone else concerned about the momentum behind Red Hat? I mean, doesn't it seem like they're getting all of the money, and most of the media attention?
I hate to say it, but all of that money is buying a lot of influence in Linux. Influence=power. Power corrupts.
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The real Paul Vallee is slashdot userid 2192, and, what do you mean it's not cool to point out your low userid?
Are there not a few reasons as to why Red Hat is getting so much attention?...
a) They appear to be the most visible Linux distribution producer of the lot. (Pacific HiTech appear to be the most visible Linux distribution producer in Japan - I also hear that Linux has taken off in a Big Way in Japan, due in part to the economic conditions there (i.e. bad) - Japanese business appears to have caught on to the fact that not only is Linux BETTER than NT, but an order of magnitude CHEAPER).
Being the most visible producer of a Linux distro, means that the PHB of Dell etc have a clear target to focus on.
b) Red Hat is a _Business_, and it currently appears to be in the business of - from Dell's etc. perspective - an "up and coming" alternative to the proprietary world of MS, and if Dell or whoever wants to have a stake in Red Hat, so what?
c) I simply think that Red Hat is being a shrewd player in the OS market. What better way to introduce Linux to the corporate world than to have Big Names invest luverly _cash_ in them? And then (hopefully) use that cash to produce a better distribution. Remember folks, RH is a business. Research and Development in a business costs Real Money - IF that's what RH is doing with the cash.
To sum up - I don't think this should be _worrying_ at all. Linux by mere definition of the GPL simply cannot be kidnapped by any one company or individual. Certainly, they can maybe produce their own proprietary stuff to be run under Linux, but surely it's up to _us_ - the customer/Linux community as a whole - that determines what can be done to Linux?
Hey! Wasn't dell the one to put those "by opening this package you agree to the terms of the EULA listed inside" stickies all over their laptops?
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I'd say Dell and MS have a symbiotic relationship, only MS doesn't depend heavily on Dell. If you think about it, what really sets Dell apart from the rest of the OEMs? A name brand, sure. But how about prices? None of these OEMs really have propietary technology of their own, none of them have any particular magic that can't be done by the rest of the pack. While Dell is high volume, it doesn't make THAT big of a difference in terms of hardware. I suspect Dell and MS have a mutual understanding of sorts. Dell promotes MS, and MS gives them price reductions, software deals, and what not. If Dell angers MS, MS can screw them. It is a stick and carrot approach, and a very effective one at that. Dell needs every break it can get or they'll be swallowed. It wouldn't do Dell any good to squeal to the Feds because this would permanently ruin the relationship. An injunction against MS may free them of the stick, but they can't do without that carrot. Dell's latest linux moves are just P.R., I wouldn't be suprised if MS gave them the nod.
Did you ever consider that perhaps Dell can't live, or thrive, without MS. I covered this in the above thread, but basically. What really sets Dell apart from the rest of the OEMs is deals and 'understandings' with the likes of MS. What it boils to is essentially a symbiotic relationship. The name brand recognition is overplayed, only in the short run would this work and allow them to retain the same profit margins.
The argument that the destruction of the MS monopoly would be in the interest of Dell is weak. Any price reductions in software would immediatly be matched by their competition, they wouldn't enjoy significantly higher margins. The only thing that allows Dell to keep its market share in the long term is the existence of MS. If RedHat became the de facto OS, it would most likely be a pretty flat price for all OEMs. It would marginalize Dell relative to competition. They would lose their market share, and hence their profits would shrink.
Am I the only one who is getting REALLY annoyed by the fact that companies that could give a damn about Linux are going to be able to invest and cash in on RH and Linux's success, while the programmers -- the average Joe -- cannot buy stock/equity in RH?
If RH was publicly traded, that would be one thing, but as it stands now the people who made the movement happen, the ones who put RH where they are, cannot similarly invest and buy stock in RH.
Why is that?
Did you catch the note about Burlington Coat Factory ordering 1,250 Linux desktop machines?
9 9/9904/6a.htm
To me thats the big news, not Dell's investment.
Read it here http://www.dell.com/corporate/media/newsreleases/
Dell press release.
I don't find it worrying. I think it's great that RedHat have extra investment to pump back into their product!
:)
I used Debian myself, and I don't really understand all this 'RedHat are the next Microsoft' rubbish. Debian is maintained by individuals and will always provide a 100% free and open alternative to RedHat.
Apt-get
Dell's equity investment in Redhat is being trumpetted by a success for Linux, but it really hasn't accomplished anything.
Microsoft is still untouchable.
Try this: go to Dell's website. Configure yourself a Linux workstation. Now confingure an NT workstation with the exact same hardware, software and support.
You'll quickly see that Microsoft still rules the day. These computers don't have Linux instead of NT, they have Linux in addition to an NT liscence that you pay for, but never get.
I hope I'm wrong on this, I didn't check every combination, but it is a worrying revelation. In time, maybe Microsoft won't be able to do this, but that time is still years away, if ever.
The reason to "go public" is to raise funds for expansion. Secondary reasons are so you can cash out your venture capitalists. I don't know if Red Hat was backed by venture capital or just by the founders, so this may or may not be a concern. A third reason is so the founders can sell off some of their personal holdings in order to get cash. I should mention that you can "go public" by selling bonds as well. These often require registration statements and quarterly reports to be filed with the SEC. This is a great way to find out about private companies that don't have their stock traded yet.
Going public has its downsides. First is that you are required to file reports with the SEC, which exposes your financial structure and your financial reports to the outside world. The next is that it can be difficult to justify to stockholders long term investment that may or may not pan out. How does Red Hat justify to a mutual fund manager hiring Gnome developers then putting the resulting code under the GPL? It might be the best decision from a business as well as ethical standpoint, but it is non-traditional and would probably require some explaning.
Red Hat seems to be able to find funds via private placements, so has been able to avoid going public. Remember, the longer you hold off going public, the better for the initial stockholders who will generally see less dilution.
There are two ways to "buy equity" in a company. One is for you to acquire an existing share of stock from someone who owns one. The other way it to buy shares issued by the company. The first is more common, as that is what people do on the New York Stock Exchange every day. In the case of a private company, they are usually issuing new shares to investors because then then money goes into the company's coffers to fund expansion. However, doing this dilutes the ownership of the existing stockholders.
Typically there is no real limit on how many shares a company can issue. Corporate charters generally contain a maximum number of authorized shares, but this can be increased by a vote of the shareholders. The real problem is the dilution, which tends to anger existing shareholders if it is excessive. Publicly traded companies often lose 5-10% of their stock price when announcing secondary offerings. Issue to much stock and you'll drive your stock price down to zero!
Of course the Red Hat founders are probably stock rich and money poor. They might be selling off some of their personal shares in order to get cash to spend on houses or whatever. But it is pure speculation to think of such things.
In fact, investment banks routinely make IPO stock available first to their preferred customers. This may or may not include Intel, but it probably does not. However, the odds of you being able to purchase IPO stock at the IPO price are zilch, unless you have some sort of in with investment banks you might not have told us about.
One of the more outrageous practices of the investment banks was to hold back a portion of the IPO stock until the price had already shot up on the first day of trading. They then sold the stock to favored clients at the IPO prices for an instant arbitrage profit. I don't know of the SEC has cracked down on this or not, but they certainly should have.
Posted by Mike@ABC:
I have to disagree with this "Microsoft Is Master Of All" view in the above posts. If it went to Dell and told them that they needed to quash (or support!) Linux, Michael Dell would certainly be within his rights not only to tell Microsoft to go to hell, but he'd probably also offer to testify against Microsoft at the trial.
Microsoft really has to watch its step when it comes to its OEM partnerships. It's already put revamped OEM contracts on the table in its DOJ settlement talks, and the company is already trying to play nice in order to convince the DOJ to lay off.
In other words, Microsoft has to act like every other software vendor out there, at least until the appeals are exhausted -- some time in 2001. By then, Linux (or BeOS, FreeBSD, MacOS, or whatever your poison) should have a good shot at ending the monopoly.
Posted by Mike@ABC:
Well, yeah. With a free OS, of course they're going to charge big bucks for support. But when you consider the high price of licenses for a Windows NT system, most bean counters will still look at Red Hat as a huge bargain. And most MIS administrators worth their title will probably either a) have a Linux hacker on staff, or b) just scroll through the newsgroups until he finds the solution to his problem.
There are a lot of people who don't know anything about Linux (other than what they've read on ZDNET) who would buy Red Hat stock based on media hype, and I don't think many people at Red Hat would want these folks voting in a share holders meeting.
TedC
I don't know that any of the companies that have invested in Red Hat have really invested that much; it's always an undisclosed amount.
I think they're doing for the image more than anything. Linux is riding the media wave that Java did two years ago, and a small investment in Red Hat is nothing to IBM, Intel, or Dell -- it's cheap, positive media attention.
Either that, or they're giving MS the digital finger...
TedC
Saw the announcements on the business wires. Checked Dell's web site - a search for Linux turned up nothing newer than mid March.
And where are they selling systems with Linux? All I could find on the web site were systems with different Windows/MS apps options. I'm sure this will all get fixed eventually.
In the meanwhile, it increases Linux's credibility when a vendor of Dell's size and "presence" at least announces they will "offer" linux on there systems (even if MS/Win remains 95-99%+ of their sales).
Don't get me wrong, RedHat 5.2 installs like a dream, for the most part. I've rarely had any problems with it attributable to RedHat. On the other hand, their Xconfigurator is fairly primitive as far as Monitor Selection goes, and it could be legitimately improved. Not a great big deal, but it would be nice.
:-)
What I'm talking about is largely more for reporters than anyone else. If RedHat made their install process more newbi-friendly, it wouldn't generate reports that make the lives of tech-people more difficult.
They laughed at Einstein. They laughed at the Wright Brothers. But they also laughed at Bozo the Clown. -- C. Sagan
Does anyone know if there's any equity left in RedHat that belongs to RedHat?
Do they plan to spend any of this money that they're getting to improve the installation process, like a full pnp list of monitors for monitor-autodetection? Adding more "intelligent" installations options, that will automatically invoke fips and things like that? Maybe invoking X in lowest common denominator for their install (options: B&W Color Graphical, or something like that)? They sound like they should be able to beat down the installation difficulties of Linux with money, at this point.
They laughed at Einstein. They laughed at the Wright Brothers. But they also laughed at Bozo the Clown. -- C. Sagan
From the article, I'm betting the sequence of events went like this:
1) Burlington is a customer of Dell
2) Burlington, being a forward looking company, decides to switch to Linux for it's operations
3) Burlington calls Dell, says "we need 1250 Linux workstations... Can you do it, or should we call Compaq?"
4) Dell buys equity in RH to cement their position (probably cost less than they'll make on the Burlington deal alone)
Therefore, I say Congradulations Burlington, you rock!
However, a better question is -- how good are the tools? Very good, as a matter of fact:
- The Symantec Visual Cafe Pro for Java was Info World's product of the year. I'd love to have VCP for Java in Linux.
- (If it is still available) I have got journeyman work out of their 7.2 C++ compiler for several years now.
- Symantec is one of the two major C++ compiler manufacturers for the Apple OS [the other being Metrowerks' CodeWarrior].
- A look at the board of directors reads like a who's who of top-notch technical programming talent. Whose tools and utilities have bailed thousands of us out of M$-induced hell.
If Symantec, Metrowerks (who has already announced), and Inprise (Borland) all move to the Linux bandwagon, then a lot of top notch talent and money will be on the side of all of us professional (i.e. making a paycheck by writing code) programmers who want Linux to be the OS of choice for everyone....Open Source isn't the only answer -- but it's almost always a better value than the alternatives...
Microsoft waited to release Windows 95 and some of the associated API's until all of their major applications (Excel, Word, PowerPoint, and Access) were complete and to a large extent, debugged. This means that anyone --Netscape, Lotus, WP, Novell, etc-- writing a competitive product was automatically several months behind in the ability to do compatibility testing and debugging of their own products. So (magazine advertising collusion aside) that M$ products would automatically get good reviews, sell more product, etc. until the other companies caught up, by which time a large percentage of the consumer and most of the corporate market has already bought and standardized on the so-called but only temporarily "superior" product.
Contrast this with Linux, where a given release is thoroughly pretested, and all of the applicable code is available from the get-go. This means that we're talking not only a superior operating system, but an equal opportunity business market from the get go. No using the operating system monopoly to sell application software anymore.
So I am 100% sure that M$is are NOT taking things very well. However, this time the Feds are finally watching the beast from Redmond with a magnifying glass. So M$ can't use their FUD and other monopolistic practices to keep Dell, Gateway, or any other major supplier "in line" without the DOJ slapping them silly (translation: levying heavy fines) for trying.
Software aside, for the major PC hardware vendors, Linux makes better business sense in either the server OR consumer market.
- They no longer have to pay an increasingly high OS royalty to Microsoft, nor deal with or be associated with M$ software or tactics.
- Over a period of time, the corporate cost of tech support SHOULD decline as Linux gains ascendancy, because 99.99%of all of the problems and solutions in Linux are solved and documented by the technical user base, and quickly incorporated into the code base.
- If Dell, etc. installers are doing their jobs correctly (this requires PHB* support), a machine sold next month should have more stable code than the machine bought today. Which translates into higher user satisfaction.
- End users and corporations no longer have to pay for what is essentially an OS tax - "service packs" to correct problems which should have been fixedin the basic OS. Instead, they are expected to become literate enough to apply true upgrades via a free source -- the Internet. Within a corporation, the cost of support will similarly decline.
All of these things will translate into higher repeat sales in the future -- good for business, wouldn't you say? My only question is, how long will it be before major players such as Lotus and Symantec wake up and shift gears into the Linux world?* PHB = Dilbert: Pointy Haired Boss
...Open Source isn't the only answer -- but it's almost always a better value than the alternatives...
I used to work in tech support at Gateway. One of their major accounts used Unix exclusively, and every box we shipped out the door to that client had Unix preloaded. Don't let the anti-MS hype fool you; it has always been possible to get ANY OS preloaded on ANY box from ANY OEM. They don't market that fact to Joe Blow, mainly because Joe Blow generally won't want to spend the additional cash it will cost.