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Red Hat's Billion-Dollar Coup

Red Hat's Billion-Dollar Coup

"Red Hat represents a new kind of capitalism," suggested Google+ blogger Alessandro Ebersol. Specifically, it's an example of "the company that really helps society and gives back to society, not like the others (M$ and Apple), which only take advantage of society and give nothing back. I wish more companies were like Red Hat."

By Katherine Noyes
04/05/12 5:00 AM PT

We've all known for some time now that Red Hat would soon be FOSS's first arrival to the billion-dollar club, but somehow that advance knowledge didn't make the official news any less exciting.

No indeed!

So when the word broke late last week that that much-anticipated milestone had finally been achieved, cheers and fanfare could be heard throughout the land.

A $100,000 Donation

There was joy, there were jabs at the naysayers, there were countless congratulations from fans and bloggers around the globe -- including the Linux Foundation's own Jim Zemlin.

When Red Hat followed up on the news by announcing its US$100,000 donation toward "the future of open source," the din on the streets of the Linux blogosphere soon drowned out everything else.

Linux Girl took refuge down at the Punchy Penguin Cafe, where patrons were enjoying a celebration of a quieter kind.

'Good for Them'

"This is good news for open source generally," enthused Chris Travers, a Slashdot blogger who works on the LedgerSMB project, over a fresh Tequila Tux. "I am excited for Red Hat, and hope other open source distributors follow."

Indeed, "good for them," agreed Google+ blogger Kevin O'Brien. "I have always liked the formulation that you don't make money with Open Source so much as you make money because of Open Source."

Of course, "even that may need rethinking with this," O'Brien added.

"I pair this with the news that the company behind Blackboard just bought two companies that provide service for Moodle, an Open Source competitor," he explained. "So it looks like providing business services is a good place to be, and you can do that while offering your clients an open platform that they can feel confident using without having vendor lock-in problems."

'M$'s Most Locked-In Users'

Red Hat made its revenue "mostly in subscriptions for support of GNU/Linux on servers, but they also are rolling out GNU/Linux desktops and thin clients for businesses," noted blogger Robert Pogson.

"Their customers are some of M$'s most locked-in users," he added.

IBM has been "in the same boat providing GNU/Linux goods and services globally" for years, Pogson noted. "IBM invested $1billion in GNU/Linux in 2001 and had that much revenue the first year. They have been growing their business ever since."

So, "the fact that business is moving rapidly to web applications instead of software running on thick clients and that business sees value in using GNU/Linux on clients and servers means an end to monopoly everywhere in IT," Pogson predicted.

'A New Kind of Capitalism'

"I hope this means we can finally stop hearing all of that FUD about it not being possible to make money on open source," mused consultant and Slashdot blogger Gerhard Mack.

In fact, "Red Hat represents a new kind of capitalism," suggested Google+ blogger Alessandro Ebersol.

Specifically, it's an example of "the company that really helps society and gives back to society, not like the others (M$ and Apple), which only take advantage of society and give nothing back," Ebersol explained.

"I wish more companies were like Red Hat," he added.

'Thanks, Red Hat'

For Hyperlogos blogger Martin Espinoza, the real news was Red Hat's $100,000 donation to open source.

"Red Hat has always given back to the community, notably in the form of reams of code," Espinoza told Linux Girl.

"When I worked for Tivoli, they made their first billion-dollar year under IBM, and their response was to throw a party featuring Lyle Lovett," he recalled.

Red Hat, on the other hand, "threw a party for Open Source and Free Software," Espinoza added. "Lyle sucked. Thanks, Red Hat."

The CentOS Factor

Does the community treat Red Hat as well as it treats the community? Slashdot blogger hairyfeet wasn't so sure.

"Who donates more code than anyone by far back to the community? That would be Red Hat," hairyfeet pointed out. "What OS is on nearly a third of web servers? That would NOT be Red Hat but a leecher mod called CentOS which was 'created' (I would say ripped off) by a company that USED to pay RH for licenses and then decided they would just take the code."

So, "while I congratulate RH on this milestone, I wonder how much farther along the quality of RH and the code they donate would be if CentOS dried up and blew away tomorrow," he added. "Would the community actually support RH then? Or would they simply switch to another distro rather than part with a penny?

"It's just sad so many in this community would support leeching off a company that has done so much for them," hairyfeet concluded.

'Linux Desktop Month'?

In any case, "Red Hat is obviously doing more than a few things right -- the billion bucks is just the outward sign, but the decisions that led to it were made almost seven years earlier," opined Barbara Hudson, a blogger on Slashdot who goes by "Tom" on the site.

To wit: "Red Hat surprised everyone in 2006 by buying JBoss for between $350 and $420 million when Oracle hesitated," Hudson pointed out. "That deal gave Red Hat considerable currency in the business server world."

In fact, "this focus on business servers is why Red Hat probably earns more money than all the other Linux vendors combined," she suggested

"Who knows -- maybe when Red Hat is making twice as much in a few years, people will start noticing that the trickle-down from Red Hat's success has made the latest Fedora into a better desktop than some of the 'desktop-centric' distros," she mused.

"A few more billions and maybe we can finally have, if not a Year of the Linux Desktop, at least an annual Linux Desktop Month?" Hudson concluded.


Katherine Noyes has been writing from behind Linux Girl's cape since late 2007, but she knows how to be a reporter in real life, too. She's particularly interested in space, science, open source software and geeky things in general. You can also find her on Twitter and Google+.


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