Red Hat — Stand Alone Or Get Bought? 199
head_dunce writes "It seems that this economy has inspired a lot of businesses to move to Linux, with Red Hat posting profits that beat everyone's expectations. There's a dark side to being a highly profitable company in a down economy, though — now there are talks of Citigroup and Oracle wanting to buy Red Hat. For a while now, we've been watching Yahoo fend off Carl Icahn and Steve Ballmer so that they could stay independent, but the fight seems to be a huge distraction for Yahoo, with lots of energy (and money) invested. Will Red Hat stay independent? What potential buyer would make for a good parent company?"
Buying Red Hat? (Score:5, Insightful)
I think that the worst possible thing is for Red Hat to be consumed by a larger company such as Citigroup or Oracle. Their statements and actions demonstrate little understanding or regard for the culture in Red Hat.
Their wish to buy Red Hat is akin to the wish to put a flowing river in a bucket. Once the water is in the bucket, it is no longer flowing.
To put it differently, to derive the benefits of Red Hat, they would either just buy the software they produce and use it, or buy their stock and sit on it. But as soon as they try to control it at their own whim, that which was free and living, will squirm away, somewhere else.
Imagine what will happen to all the customers, developers and channel resellers who trust Red Hat now. It will simply not be the same with a new master.
I hope Red Hat can maintain their indepence for the sake of everyone who depends on them.
Re:RedHat is a dead end (Score:4, Insightful)
Hahahahahahahahahahahahahahahahahahaha....
Remind me, which company is currently turning a profit, Red Hat, or Canonical?
You are clearly not very familar with Red Hat at all so I'll let you in on a little secret. Red Hat is not making their money on desktop installs.
Intel, please (Score:5, Insightful)
When I was at Red Hat, I assumed the scenario would be that Oracle would make a hostile takeover bid, as they are wont to do, and then IBM would come to the rescue with a competing offer that wouldn't gut the soul of the company quite as badly. Now that IBM is in talks with Sun, that seems less likely, unless the IBM/Sun deal falls through, in which case it's a no-brainer for IBM.
Failing that, the next best candidate, in terms of the good of the community, would be Intel. I mean no disrespect to AMD in this regard, because it's not really about hardware, but rather Intel's role as a technology mutual fund that happens to have CPU, chipset, and networking hardware in its portfolio. Adding a Linux vendor would further establish them as a developer of core computing technologies, in a role as a partner rather than a competitor to Oracle and IBM. Intel has a long history of working well with the open source community, which has certainly played a role in their acquisition of some top Red Hat talent over the past few years.
With all due respect to the many dedicated Linux engineers at Oracle, I don't trust Larry Ellison as far as I can throw him. Nor do I trust the Red Hat shareholders, who are overwhelmingly financial institutions on the brink of bankruptcy, to take any sort of long term view when considering competing offers, which is why I would not be shocked to see them cash out to Oracle, even knowing full well how the company would be gutted, because they so desperately need the money right now just to stay solvent. I just hope that when Oracle makes the move, which seems all but certain if the IBM/Sun deal goes through, that there's someone else around with a genuine commitment to the community and deep enough pockets to make a cash offer, since a stock deal under terms typical for large acquisitions wouldn't give the institutional shareholders the liquidity they need.
Re:Question: (Score:2, Insightful)
Java has been taken over by the corporate world. The way I see it, every time someone had a problem with it, they said "I know, I just add some XML, and name it with a 4 letter acronym or some cute coffee-inspired pun."
If you want quick and easy, try Qt. Even Eclipse plays nice with that.
Re:RedHat for the people (Score:3, Insightful)
Citi also had the idea to push for less bank regulation [wikipedia.org] and was a big player in subprime and CDOs [fiercefinance.com].
How could you not take their advice?
Re:Why is redhat worth so much? (Score:5, Insightful)
I have to admit i've always been at a total loss as to why redhat could have the same sort of market cap as someone like Sun (at least pre-takeover rumours).
I suppose it's certainly more profitable to take other people's work and package it up, but what does that offer to a buyer?
RedHat is the leading corporate contributor to the Linux Kernel [itnews.com.au].
What they do for the buyer is make sure that their distro will work with certain software so that ISV's can certify the platform.
For example... You want to run SAP CRM. Maybe you can get it to work on Debian or Ubuntu, but SAP won't support it, and you likely need SAP support. They have certified it to run on RedHat Enterprise Linux so you can use that.
That's what most people care about. ISV support. If all you're doing is running a LAMP stack, then you probably don't care and will run CentOS, Debian, Ubuntu Server, etc. In fact, I believe a lot of hosting companies have been switching to CentOS ever since RedHat no longer provided a free version other than fedora.
They also have other products that run on RHEL.
Re:I would like to see RedHat stay independent (Score:3, Insightful)
Re:RedHat is a dead end (Score:5, Insightful)
IBM doesn't support Debian-based distros on their servers.
Every version of Red Hat is LTS, not just every other like with Ubuntu.
Red Hat owns and has tons of expertise in JBoss, which is a benefit in the enterprise.
Red Hat support IBM Power chips, Intel Itanium2 and IBM Mainframes, though Ubuntu supports Sparc. Those SunFires tempt me...
Last year I finished a gig at a telco that deployed over 9,000 IBM Blade Servers all running Red Hat.
It works both ways. I cut my teeth on Red Hat, so RPM is second nature to me while Debian's dpkg and apt took some fumbling. I have Ubuntu-EEE at home but run either CentOS or RHEL on servers.
Re:Why is redhat worth so much? (Score:5, Insightful)
1) Assuming by buyer you mean "end consumer":
Nobody asks, when they buy a copy of a board game, who invented the game or who made this copy. They worry about price, and how much enjoyment they will get out of it, and such. If they like chess more than Risk, they'll buy chess, even though nobody has a copyright on it. If you point out they could make their own chess set instead of buying one, they'll point out that they'd rather buy one than spend the time and effort, thanks. If they'd rather spend the time and effort, they'd have already started making their own.
So, go ask the buyers of Red Hat product what value they're getting. Buyers don't generally give a damn who did the work, as long as they're getting something they value for their money.
2) Assuming by "buyer" you mean "stock purchaser":
The reason for business is to make money, not to own technology. Since the buyer of the stock is interested in making money, he buys stock in companies that make money, and doesn't in companies that don't. He only cares about a company having unique technology insofar as the unique technology allows the company to make money. The same applies to every other feature of the company.
The reason to buy Red Hat, then, is that you expect Red Hat to make lots of money. The reason to not buy Sun is that you expect Sun will not. This applies whether you're buying just one share, or buying the whole company.
Very, very occasionally, a company with marketable technology will have utterly miserable, incompetent management. In those cases, there may be a realizable profit if you buy the mismanaged company or their technology and put new, competent people in charge. In general, this very rarely happens. Like pretty much anything, quality of management follows a bell-curve distribution, and you'll usually swap managers in the middle of the curve with experience for new managers in the middle of the curve who then have to learn new stuff.
Re:Why is redhat worth so much? (Score:5, Insightful)
If RH produces their product for less than Microsoft they have a competitive advantage. It's not just Windows vs Linux, JBOSS is also doing well against IBM MQ.
Re:I would like to see RedHat stay independent (Score:3, Insightful)
Re:Why is redhat worth so much? (Score:4, Insightful)
there is another reason to buy a company... if it's eating into your own market then you buy it so you can shut it down and strip out anything worth keeping thus preserving your own market.
Re:Why is redhat worth so much? (Score:5, Insightful)
I have to admit i've always been at a total loss as to why redhat could have the same sort of market cap as someone like Sun (at least pre-takeover rumours).
Ahahaha, RedHat has been ridiculously priced from day 1, but this guy is a 'troll' for asking a perfectly reasonable question.
To answer, Linux is perceived as a growth market, and Intel and others have invested a ton of money in RedHat to insure that they are in a strategically dominant position in the Linux ecosystem. There is only one organization that can coordinate changes on every level of the Linux stack, and that's RedHat.
However the actual value of that position in terms of revenue is still an open question.
Re:RedHat is a dead end (Score:3, Insightful)
Typical Slashdot misunderstanding (Score:5, Insightful)
in TFA there is no mention of Citigroup looking to buy Redhat; just a mention that a Citigroup stock analyst upgraded his target share price to $17 and kept the recommendation to "hold". ./ has gone and commented on how Oracle culture would be compared to Citigroup's whereas that's not even the point..
Once again everybody on
Sheesh people, the linked article is probably under 250 words. Could you not have given it a read? Did it not strike you as something strange that a bank would want to buy a software vendor?
Re:Why is redhat worth so much? (Score:3, Insightful)
Big companies stagnate easily. I wouldn't want them to fall into that trap.
Re:JBoss... (Score:4, Insightful)
I am worried. RedHat has embarked on a patenting strategy and the company may be bought by someone with less scruples.
What would RH employees think ? (Score:5, Insightful)
The most important of the above is the RH staff. If citigroup/... were to buy RH and do the ''wrong'' things the staff would simply decamp, create another company ('BlueBoot'), take a copy of all the source code (its all GPL remember) and the RH customers would follow the staff for their support.
Any clueful potential purchaser would realise the risk that what they bought could just evaporate.
Re:Why is redhat worth so much? (Score:4, Insightful)
Shutting down red hat wouldn't work. The developers would just start a "Blue Hat" company and start building a distribution called "sombrero".
Re:RedHat is a dead end (Score:3, Insightful)
Not really. Moving from distro to distro really isn't that that hard. Ubuntu is really nice and Ubuntu server is gaining a lot of traction.
Red Hat is still very popular. If you want a JOB now I suggest that you install and learn Centos. While your at it learn Ubuntu as well.
The more you learn the better. Goodness knows we don't want to be like the people that think Mac OSX sucks just because it isn't Windows. Or that where so sure that Vista would rock.