Business Week on Red Hat CEO Bob Young

A reader sent us a recent BusinessWeek article interviewing Red Hat's Bob Young. More indepth then most of them usually, I learned some of the odder tibits about Red Hat interesting, including the toliet in the first apartment and other such stories.

Comments

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[Pretender R*S]

As far as I understand, Bob Young has stuck by a couple of key principals.

Red Hat does not sell Software.
Linux is a loss leader for a deflating market.

First and foremost Red Hat does not sell Software, they give it away for free. I downloaded 6.0 of their website just fine. Didn't pay them a dime. They were happy to have me install it at my work even though they didn't know I had it.

Red Hat Sells Marketing and packaging. Just a company in Seattle we know, but Red Hat doesn't make any pretentions. People by label and brandname, and in return get piece of mind. If Red Hat can stick by that they will do reasonably, they will FAIL to become a monopoly, and they have a chance to make money. People will buy Branding, remember designer Blue Jeans in the 1980's? People payed lots of cash for manufactured images.

#2

Redhat wants to deflate the computer OS market, they want to take a (can't find the numbers from the Sizing the Linux Market article that Bob Young wrote right now) large market and reduce it to 1/10 its current size (total $$ per year spent on server software) and he believes that in that Market Red Hat will take over a larger and larger share. Also it is reasonable to assume that in the Internet server market as prices drop more people will want more servers (small business under 30 people which the plurality of people are employed). Again they can make lots of profit per sale, not have very many sales per people using the product and as long as they stay lean still make a profit.

Also in a market where the services/products are being commoditized (and since they are standards they can be implemented by multiple vendors, increased compition, lower prices, lower profit margins) the biggest way you distinguish yourself is via "exteriors". The biggest exteriors are support/professional services. Will everyone buy them? NO

Most people will never buy proffessional services, but if you have a brand that establishes you as the "Expert" (Red Hat is the biggest distributer of Linux in the US, that makes them an expert), then peole will come to you. It is service where Red Hat is really taking on Microsoft! Microsoft has legendarily poor service especially for corporate support, it is Digital/Compaq who has more NT Service Proffesionals than Microsoft, It is IBM who is selling massive NT Service solutions and your handfull of the usual consultancies (PriceWaterhouseCoopers, Anderson Androids, .... ) who are actually supporting and servicing NT.

And it is those orginizations who have their hands tied. Linux offers them freedom to produce "value added IT services" It alows them to fix late and broken projects by working on the OS, and who are they going to turn to for experts? Whoever has the best branding!

From what I can see Red Hats strategy isn't pretty in the Freedom Software sense, but it is not at odds with it. Red Hat is a scary marketing company, but they are doing the right thing. Red Hat is not a tech company but a marketing company, they need some techs so they have something to help drive their marketing. I wish them the best of luck, as I would love to see a world where the best product wins, and Red Hat is helping that come true.