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The Secret to Red Hat’s Success

Red Hat 33 Comments

An enterprise Linux “expert” answers the question: “How can an open source software company like Red Hat stay in business if CentOS – and Red Hat itself – give their code away for free?”

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David Adams

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33 Comments

  1. 2007-12-04 9:44 pm
    asdx24

    I haven’t read the article because I already know.

    The secret IS Linux and Open Source, and I don’t think is a secret anymore because most people already knows it.

    Linux and FOSS is the future.

    Edited 2007-12-04 21:45

    • 2007-12-04 9:58 pm
      BluenoseJake

      uh, a lot of geeks know it, and some managers, but to say everybody knows it is a gross exaggeration. I prefer BSD myself. So I guess I don’t count

    • 2007-12-04 10:02 pm
      sbergman27

      Their “secret” is dropping the lock in strategies which conventional modern businesses use, setting things up so that the customers have a choice, and then doing their *damnedest* to be the best one. Red Hat makes money the old fashioned way. They earn it. It only seems novel because it is a rarity, today.

      • 2007-12-05 12:57 am
        kaiwai

        Their “secret” is dropping the lock in strategies which conventional modern businesses use, setting things up so that the customers have a choice, and then doing their *damnedest* to be the best one. Red Hat makes money the old fashioned way. They earn it. It only seems novel because it is a rarity, today.

        And you think its a Red Hat only thing? Sun Microsystems have been doing it for over 20 years! hardly a new or innovative strategy.

        Edited 2007-12-05 01:02

        • 2007-12-05 1:44 am
          sbergman27

          “””

          And you think its a Red Hat only thing? Sun Microsystems have been doing it for over 20 years! hardly a new or innovative strategy.

          “””

          No. Not to knock Sun, but it’s not quite the same. They’ve been doing the “mixed source” thing, like Novell. They’ve employed more lock-in than Red Hat. Though notably less than some. Things are changing, though.

          Edited 2007-12-05 01:58

          • 2007-12-05 2:03 am
            kaiwai

            What lock in have they been using? Processor – open, firmware, open and documented. Technologies used – again, all open.

            Yeap, I guess its riddled with lock in *rolls eyes*

          • 2007-12-05 2:10 am
            sbergman27

            “””

            eap, I guess its riddled with lock in *rolls eyes*

            “””

            *sigh*

            Take a chill pill, kaiwai. I’m not attacking Sun. But you are claiming that they have long been as open as Red Hat. OpenSolaris is a relative newcomer to OSS. Java is a brand new player in OSS. How many *years* did we ask Sun to open Solaris and Java before they listened?

            Open standards? Sure. Sun has always be good about that.

            Edited 2007-12-05 02:11

          • 2007-12-05 2:14 am
            kaiwai

            Take a chill pill, kaiwai. I’m not attacking Sun. But you are claiming that they have long been as open as Red Hat. OpenSolaris is a relative newcomer to OSS. Java is a brand new player in OSS. How many *years* did we ask Sun to open Solaris and Java before they listened?

            Java was fully open, fully documented for anyone to implement. Just because it wasn’t submitted to a standards body, doesn’t make it any more or less open than say any other thing that exists in the IT world.

            Open standards? Sure. Sun has always be good about that.

            Excuse me, but it was you guys who claimed that you need to be open source to stop lock in and proprietary formats. Well, Sun had a proprietary operating system using all open standards. The fact that sun didn’t use proprietary protocols and formats, had no vendor lock in, and kept customers meant that a open standards based product model is workable. All Red Hat did was extend it out to open sourcing code. Hardly something new or revolutionary.

            Edited 2007-12-05 02:18

          • 2007-12-05 2:50 am
            sbergman27

            Well, I can see that you are not going to be satisfied until you get an argument going. Sorry to disappoint, but I really don’t see anything worth arguing over.

            “””

            Excuse me, but it was you guys who claimed that you need to be open source to stop lock in and proprietary formats.

            “””

            Please don’t refer to me as “you guys”. I’m not sure who you are talking about.

            “””

            All Red Hat did was extend it out to open sourcing code. Hardly something new or revolutionary.

            “””

            I would consider their 100% Open Source policy a new and revolutionary business model for this industry. Though it would not really be all that notable if it were not for their *success* at it.

            At any rate, to see the difference in openness, simply envision Oracle and/or a community body redistributing their own recompiled and rebranded versions of Solaris and giving it away for free, with free updates. Or undercutting Sun by half on tech support costs for that .

            That would fly now, with OpenSolaris. But just a few years ago it would have meant cease and desist letters and law suits. McNealy’s Sun would *never* have allowed competition of that nature.

            Which is not to say that Sun has not been a good team player in the industry.

          • 2007-12-05 2:50 pm
            aitvo

            See my you must be high comment from yesterday:

            http://www.osnews.com/permalink.php?news_id=19004&comment_id=288662

            I think he’s either high or he’s a whiny little b*tch that needs to get some and he’s taking it out on everything that isn’t her I mean his way.

            You decide.

          • 2007-12-05 2:48 pm
            aitvo

            Open, really?

            I guess you forgot about this little thing.

            http://www.sun.com/smi/Press/sunflash/2001-01/sunflash.20010123.1.x…

            Java has NOT always been open, they opened it in 2006.

            http://www.sun.com/2006-1113/feature/story.jsp

            You post like you are some sort of authority, yet you don’t seem to know even the basic facts about the technologies you are spinning.

          • 2007-12-05 2:12 pm
            TemporalBeing

            Open standards? Sure. Sun has always be good about that.

            Sure, just look at the Cassini Network Card, or Sun’s SunGem Network Cards; or the various chipsets used for the Sun IPC Workstation. (Yes, the processor itself is well documented, but there are numerous different chipsets that are combined with it for different versions of the hardware using the sun4c processor.)

            I’d rather use Linux and hardware that is known better, more common, and from more than one vendor.

          • 2007-12-05 9:04 am
            SReilly

            Don’t mean to get too involved in what I consider a bit of a daft argument but try NIS+ for a Sun closed standard lock-in. No other operating system can implement NIS+ without licensing the tech from Sun, therefore no support for Linux.

            Although today NIS+ has been deprecated in favor of LDAP, with tools to help you migrate from one system to another, it’s still impossible to implement a backup NIS+ server on anything other then Solaris.

      • 2007-12-05 1:29 am
        Almafeta

        Their “secret” is dropping the lock in strategies which conventional modern businesses use

        And instead, use the mother of all lockin strategies: Claim to be free, get them using your product, and then sell continuing support at exorbant prices.

        This is exactly what IBM did, back in the punchcard-mainframe days: Promote the good sides (then the ability to replace expensive human accountants with cheaper faster computers; today the willfull abuse of the word ‘free’ in marketing materials), and keep quiet about the fact that you’ll make sure they have to go to you for years afterwards for support and maintenance.

        The company who asks for payment once, or the company who asks for recurring payment for years: which sounds like they have the lock-in?

        • 2007-12-05 1:53 am
          sbergman27

          “””

          And instead, use the mother of all lockin strategies: Claim to be free, get them using your product, and then sell continuing support at exorbant prices.

          “””

          Poppycock! There is plenty of competition in the RHEL support arena. Oracle will support you at half the price. But only a small percentage of RHEL users choose that option. There is more to value than price. And 97% of Red Hat’s customers agree:

          http://tinyurl.com/2udvct

          CentOS provides a high quality product, and very timely updates, for free, and is probably more of a threat to RH than Oracle. But Red Hat continues to go far beyond the requirements of the licenses, providing not just the source code, but the source code all packaged up into nice little SRPMS, with all the trademarked stuff segregated into a couple of packages. CentOS would not be *feasible* for the community to support if Red Hat did not go that extra mile to make things easier for what is likely their strongest competitor.

          If “a rising tide lifts all boats” is not Red Hat’s official company motto, it may as well be.

          Your argument just doesn’t make sense.

          Edited 2007-12-05 02:00

        • 2007-12-05 9:12 am
          SReilly

          I agree with your assessment of IBM’s mainframe business strategy, and punch card tabulators before that, but to equate IBM with RedHat is just not a valid comparison.

          Where as IBM locked you in using hardware, RedHat does not even sell hardware. Where IBM locked you in using proprietary protocols and APIs, RedHat offers source code for all their products and open standard protocols.

          Clearly, your comparison of the two companies is flawed.

          As for lock-ins, don’t even get me started on Redmond! 😉

    • 2007-12-04 10:41 pm
      tomcat

      I haven’t read the article because I already know. The secret IS Linux and Open Source, and I don’t think is a secret anymore because most people already knows it. Linux and FOSS is the future.

      The future belongs to multiple choices, not one.

      Read this:

      Linux Losing Market Share to Windows Server

  • 2007-12-05 1:00 am
    kaiwai

    With Solaris opensourced it’ll be interesting to see where it fits into play – their profits seem to be rising, so it’ll be interesting to see who will ultimately lose out (or not grow as fast).

  • 2007-12-05 12:34 pm
    Soulbender

    Linux Losing Market Share to Windows Server

    Oh yeah, the awesome article where the whole pool of “experts” consists of 2 guys from IDC, one woman from AMD and Bill Hilf from Microsoft. Surely the most varied and exhaustive group of experts money can buy.

  • 2007-12-04 10:30 pm
    mikal

    Incidentally, I tried getting a trial version of RHEL 5 earlier tonight. The number of hoops you have to jump through is mind-numbing.

    Give it a try (as a new user), then compare it to getting the Windows Server 2008 RC (as a new user).

    Acoording to the Redhat web page, I’m downloading a 30 day trial right now. My Windows server trial does not expire until April.

    I don’t doubt the liberal policies of the Microsoft evalution version are partially caused by the threat of OSS software, though, but Redhat are doing themselves a disfavour by making it so difficult to download their trial version. (Also see: “Kids who pirate Photoshop will later demand Photoshop in their work place” meme)

    Edited 2007-12-04 22:36

    • 2007-12-04 10:44 pm
      superman

      > I’m downloading a 30 day trial right now.

      The “30 day trial” is for rhn (Red Hat Network) :

      http://rhn.redhat.com/

      RHEL has no time limit. Indeed, it’s free (like speech).

    • 2007-12-04 11:08 pm
      weorthe

      Incidentally, I tried getting a trial version of RHEL 5 earlier tonight. The number of hoops you have to jump through is mind-numbing.

      Why do that when the people at CentOS have already jumped for you:

      http://www.centos.org

    • 2007-12-05 3:56 am
      sbergman27

      “””

      Incidentally, I tried getting a trial version of RHEL 5 earlier tonight. The number of hoops you have to jump through is mind-numbing.

      “””

      Why settle for the trial when you can get the top of the line version at any of the sites on this page?

      http://tinyurl.com/2jr3rq

      Download the iso images, or just do a network install.

  • 2007-12-04 10:39 pm
    uproot

    some company named insight did a study on best software vendors and redhat came out #1 over companys like google and HP.

    http://www.redhat.com/promo/vendor/

    or

    http://www.newsobserver.com/1566/story/807871.html

    according to 500 IT people polled 97% plan to continue to renew contracts with Red Hat. Thats a very, very high renewal rate by any standard. I’d say thats a good reason for thier success. i hear people on message boards claim redhat th3 sux0rz for support but IT exec’s dont appear to agree by a longshot.

    Edited 2007-12-04 22:42

  • 2007-12-04 11:09 pm
    Luminair

    The reason you can give away the code for the software you develop and still make money is because the developer of the software enables the software to have value.

    The developer is the expert, so without the developer the software might not work in the first place. Without the developer the software would stay broken when it breaks. As all other software and hardware evolves, the developer needs to evolve their software to keep it working as well.

    And by virtue of how difficult software engineering is, it is very very difficult for non-experts to become experts, non-developers to become developers. It is very very difficult for not-the-guy-who-first-wrote-this-code to understand what the code even does.

    This is why Red Hat can sell services concerning their open source product — they are experts of their product, and the cost of entry into being as much of an expert is very very high.

    That said, Red Hat being a success doesn’t mean open source software is the be-all end-all for commercial software organizations. Leaving your source open does mean that someone else could come along and dedicate money manpower to becoming an expert at your product, eventually usurping the product and its market value from you. But either way, the real value of the product is found in the people working on the code, not the code itself.

    Great people make great code into great products. That string of implications doesn’t run backwards; the code doesn’t do anything on its own.

  • 2007-12-04 11:20 pm
    uproot

    I’d also say a good reason for their success is innovation over other distro’s.

    I dont have a listing things but go ahead and grep the kernel for @redhat and it trumps anyone else patch contributions im sure. Just look a few articles down where RedHat wrote 80% of the realtime enhancments Novell is now selling.

    Not saying they are OSS but they want to be. they’re buying out companys just to OSS code. look at netscape directory or xen, etc they spend millions buying a company or technology just to tarball some sourcode for everyone.. pretty cool stuff to me.

    I advocate redhat strongly cause i look at them like software contractors, we buy thier service they hand us source code. Everything they do has code so its a safe place to pump your money if you want to ensure open source software unlike thier competitors who tend to only do just enough as required.

    Not sure about now but last year 1/3rd of thier budget is R&D.. that means 1/3rd of thier profit is spent giving us more tarballs of source code. think about it.

  • 2007-12-04 11:55 pm
    Redeeman

    The reason redhat has success is because they have a superior product. You call redhat for support? well, you pay them, but you get the best damn thing in existence, in terms of support. Call microsoft, what can their support recommend? reinstall. oh, and that’ll be $1500.

  • 2007-12-04 11:56 pm
    sjf4

    There’s also Satellite server which is closed source as far as I know. Satellite server is a systems management product for those not familiar with it.

  • 2007-12-05 12:01 am
    agrouf

    They give a lot to the community and they get a lot from the community.

    Compared to proprietary vendors, they don’t have to develop EVERYTHING. They use the linux kernel and GNU tools. They use improvements from Novell, IBM, Sun and joe developer. They are just not reinventing the wheel every time they have to go from A to B.

    It’s just common sense.

    The real question is not how can Red Hat be that successful. They are just good to do the business.

    The real question is how can a proprietary vendor be that successful when they are ALONE reinventing the whole world. And the answer is they are not that successful. Proprietary vendors make a lot of money from secret and tax because they monopolized the world and prevent anyone from using it (through patents and cheat like that). But in reality they bring very few value if at all.

    So there is GNU, which is a hack to make the world go rounder. GNU frees the world from patents and copyrights and enables real values for everyone to use. Red Hat is using that value and brings that to customers, adding their own value in the process. They are actually using what the world know and they invent from that instead of inventing the wheel from the stone age. Of course this is successful!

  • 2007-12-05 2:00 am
    Moulinneuf

    Two things made them successful :

    Good Leaders/Managers.

    – Robert “Bob” Young.

    – Marc Ewing.

    – Matthew Szulik

    The most successful IPO of it’s days.

    There financial and service setup and financing and branding did not hurt either.

    – Open Source was only a factor against SuSe who was the only one who had closed source proprietary tools.

    – Caldera as never been a big player , they where a big US contender , who was backed by deep pockets.

    Ubuntu was not part of the environment yet. Debian was/still is a mess. Mandrake/Mandriva could have won if Jacques Le Marois did not destroy the sales department and messed up the Mandrake IPO.

    Also Red Hat is not an Open Source company they are a Free software company. That’s why they crushed Corel.

    If Open Source was a factor at all , then Open Source Unix , BSD and all the Other previous Open Source project would be the big player.

  • 2007-12-05 10:16 am
    superman

    – Partnership with MS ?

    No.

    – Apt ?

    No.

    – Provide binary and patented codecs “out of the box” ?

    No.

    – Brown paper (ala Ubuntu) ?

    No.

    – A very noisy fanboy community ?

    No.

    – Claim every day : “linux is ready for the desktop” ?

    No.

    • 2007-12-06 11:17 am
      gustl

      I would agree with you, that not having a partnership with MS is one factor of success.

      But not using apt is no advantage

      Not providing patented (where?) codecsis no advantage

      Brown paper is irrelevant

      As is a noisy fanboy community

      And not to claim Linux ready for the desktop is simply an omission. Because Linux IS ready for the desktop.