Submitted by Red Hat will announce its latest quarterly earnings today, and if the outlook of its partners provides any clue the report should be good for shareholders – as well as in future quarters. Especially interesting in a Wall Street analyst’s recent report is a finding that 45% of Red Hat’s partners are seeing customers migrating from Windows to Red Hat. That trend could be a tremendous growth indicator for the Hatters since Microsoft dominates world markets and much of Red Hat’s growth in the past has come at the expense of Unix or other Linux providers.
Windows Server Revenue grew BY 250 million to 4.4 billion in Q1.
RedHat revenue grew TO 83 million in Q1.
I suspect those “dropping” Windows are a “drop in the bucket”.
Red Hat licenses are also a lot cheaper than Windows or UNIX — one reason for Red Hat’s growth. They’ll never have Microsoft’s revenues, even if they took most of their business.
But if you’re thinking longterm, what’s better? To be a company with a modest business model sustainable into the distant future, or to be a company with a lucrative yet threatened business model?
Edited 2006-06-29 19:39
You may want to look at a pricing difference between Red Had and Solaris before you say that it is cheaper than Unix. HPUX and AIX, yes, but not Solaris.
They are talking units (number of servers), not revenue. RedHat doesn’t license the OS and often doesn’t collect anything in the form of per-machine fees. And when it does, it typically collects a lot less than MS does. MS make money off the OS license, the applications licenses, and the maintenance — RedHat sells only service agreements.
Also, it goes without saying that most of their customers that are migrating are migrating from Windows. Windows has a large portion of the market, and their competition besides Windows in that market is mostly UNIX. The UNIX customers typically have far less incentive to migrate (whereas Linux may be considered an upgrade from Windows, it’s nothing more than a horizontal shift for most UNIX users).
I work in BioTech, though, and in our industry we typically already use lots of Linux. Growth in our industry is really at the desktop (PCs in R&D being moved to Linux workstations – mostly in comp chem, comp bio, biostats, lims, and instrumentation control). Some of those people had been using IRIX prior, but most had been using Windows.
“Also, it goes without saying that most of their customers that are migrating are migrating from Windows. Windows has a large portion of the market, and their competition besides Windows in that market is mostly UNIX. The UNIX customers typically have far less incentive to migrate (whereas Linux may be considered an upgrade from Windows, it’s nothing more than a horizontal shift for most UNIX users).”
Your statement seems very dubious and a lot of wishful thinking. In my experience, I have found that Windows shops have Windows administrators who have only dealt with Windows and Unix shops have Unix administrators who have had experience with IRIX, HPUX, AIX, and Solaris. On one hand, you have people who don’t have a clue about anything that deviates from Microsoft’s point and click paradigm, and on the other hand, you have people for whom Linux is just another flavor of the many Unixs they are already very familiar with.
You might argue that Unix to Linux is just a horizontal migration, however, that 8 cpu server from 2000 running at 300 mhz w/ 4 gigs of EDO RAM and ultra2 SCSI hard drives is starting to show its age. You could choose to continue running whatever flavor of Unix you had, or you can choose to run Linux and break free from the hardware and software vendor. It might be a horizontal move, but seeing how similar the two operating systems are, it is a much cheaper, more beneficial horizontal move for many to make.
This is not some wishful thinking on my part but is indeed what I am seeing in the industry. I have interviewed one to many Unix administrators who have just started to dip their toes into Linux. Just the other day, one was explaining how when he had joined his company back in 2000, his previous employer had all their servers and engineers use Solaris boxes. By the time he left the company( about a month ago,) all the workstations had been pretty much converted to Linux and their datacenter had become a hybrid of Linux (all all new deployments) and Solaris (previous deployments) servers.
Edited 2006-06-29 20:54
Just wanted to add one more thing regarding “upgrading” from Windows to Linux. This really is something that now really depends on the eye of the beholder. Some people have a really long memory and refuse to look at how a product stands without including at least how it stood the previous ten years. For these people, Unix is considered an upgrade.
I will give anyone the fact that Windows was a very poor performer and was, at one time, extremely unstable. Infact, I specifically remember an incidence back in 2001, when I was told to replace a perfectly working, heavily utilized Linux server with a Windows 2000 server. You should have seen the smugness on my face a week later as I swapped it back with Linux because the Windows server was crashing, losing its interfaces, locking its registry, and all sorts of other wierd behavior. However, somewhere along the line during the last few years, probably about the time Microsoft released SP4 for Windows 2000, Windows has become relatively stable.
Today, when people ask what they need to deploy, I usually look at their situation, their needs, their capabilities, and their budget. I don’t consider either Windows nor Linux as an upgrade to the other. They are just different operating systems stressing a different way of thinking and focusing on different market segments. I never have had a Windows box crash in recent times. If you setup the infrastructure right, rebooting systems to install critical patches does not even affect uptime. The same is true for Linux. The bottom line, neither is an upgrade of the other in any real sense of the word.
Edited 2006-06-29 23:13
Reading between the lines, if 45% of partners each see 1 migration to Red Hat from Windows but 45% each see 2 migrations from Red Hat to Windows, it still counts as 45% of partners seeing migrations from Windows to Red Hat even though they’re at a net loss, right?
In my experience, Linux server sales come primarily from shops that are moving away from proprietary forms of Unix, not Windows. There’s a very good reason for this: Shops that are running Windows usually need to rewrite many (if not all) of their server apps in order to move to Linux. So, while the long term TCO of Linux may be favorable, it costs a lot in the short term to make the transition. But the same usually isn’t true of shops moving from Solaris or HP/UX or AIX. Most of their apps will run with few modifications, so even the short term TCO looks favorable. Considering the cost of support contracts for proprietary Unix/hardware solutions, Unix-to-Linux migration is where the market pressure has been coming from over the past 5 or 6 years. If these partners are seeing such a migration, the numbers probably aren’t appreciable compared to Unix shops. Just my opinion, of course.