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Red Hat Support Continues To Flourish 215

Posted by ScuttleMonkey
from the focus-is-everything dept.
ruphus13 writes "As the pure-play Open Source companies continue to dwindle, Red Hat has thrived through the recession. Its support revenues have grown 20+%, and account for 75+% of its revenues. 'Instead of the traditional strategy of selling expensive proprietary software licenses, as practiced by the Microsofts and Oracles of the world, Red Hat gets the vast majority of its revenues from selling support contracts. In the third quarter of last year, support subscriptions accounted for $164 million of its $194 million in revenue, up 21 percent year-over-year. All 25 of the company's largest support subscribers renewed subscriptions, even despite a higher price tag.'"
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Red Hat Support Continues To Flourish

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  • Not that impressive (Score:2, Interesting)

    by Andtalath (1074376)

    While I'm glad and all that they are so called flourishing in the recession, they are getting 194 million in revenue.

    That's a pittance in corporate america.

    Even if it wasn't gross income, it wouldn't be that impressive.

    Also, people seeking a cheaper option in a recession?
    Have we ever heard that before?

    • Re: (Score:2, Insightful)

      by cliath (978599)
      $194 million for the third quarter of 2009, $650+ mil for the year.
      • by gbjbaanb (229885)

        and Microsoft reported $10.9 billion in the 3rd quarter!

        However, that just goes to show that quality != quantity.

        • by rahvin112 (446269) on Friday January 22, 2010 @09:40PM (#30866086)

          At $609million in a year with MS at 10.9 Billion they are producing 1/20th the revenue of MS without selling a single product (where MS has hundreds) while Redhat is less than 10 years old and MS is close to 40 years old.

          I'd say what RedHat is doing is pretty darn impressive. 1/20 the revenue of the largest software company in the world in 1/4 the time while only selling support and their product is available for free. Impressive doesn't even begin to describe how successful they are at this point.

          • by kjart (941720)
            The 10.9 billion is 3rd quarter revenue, not for a whole year, so the comparison would be 195 million to 10.9 billion
    • by Jah-Wren Ryel (80510) on Friday January 22, 2010 @09:02PM (#30865820)

      That's a pittance in corporate america.

      Remember Bob Young's famous quote that his goal for RedHat was not to grow to the size of Microsoft, rather for Microsoft to shrink to the size of RedHat.

      • by westlake (615356)
        Remember Bob Young's famous quote that his goal for RedHat was not to grow to the size of Microsoft, rather for Microsoft to shrink to the size of RedHat.

        Did Young suggest how long it would take for this to happen?

      • Without a doubt an admirable goal.
        However, not exactly close.

  • by pushing-robot (1037830) on Friday January 22, 2010 @07:57PM (#30865270)

    It's not surprising that a cheaper product will prosper during a recession; the McDonalds and Wal-Marts of the world are getting boosts from the general attitude of cost-cutting. The real proof of Red Hat's success will be if companies continue to choose it over Windows during the next economic boom.

    Still, it's good news. Companies that switch now are less likely to go back to Windows in the future.

    • by Anonymous Coward on Friday January 22, 2010 @08:15PM (#30865412)
      Their competition won't be windows so much as oracle. Oracle will soon own solaris and mysql. Rumor I've heard is they'll be pushing 3 distros: Linux + Mysql, Linux + Oracle (express or full), and Solaris + Oracle to blanket the LAMP and DB market. Obviously, there will still be plenty of lamp stacks backed by free distros but RHAT will have have to do something to differentiate.
    • Re: (Score:3, Interesting)

      by guruevi (827432)

      You're practically answering your own question. The next economic boom will be about leveraging those newfangled 'open source' technologies in order to gain unprecedented profits (because after all, that's what defines an economic boom). In the downturn after that we will both have a very good open source ecosystem and on the other hand a lot of people blaming open source because they couldn't get their profit out of it.

      The only problems are going to be patents which, if not eliminated by or during the next

    • by Kjella (173770)

      Funny, I was always under the impression that Linux can be had cheap but not Red Hat. From what I hear the service is great and all that, but it's hardly the MacDonalds of the server world. That's more the web hosting companies that throw up cheap Linux/OpenBSD boxes in bulk.

      • Funny, I was always under the impression that Linux can be had cheap but not Red Hat. From what I hear the service is great and all that, but it's hardly the MacDonalds of the server world.

        You should probably have a look at CentOS [centos.org], who recompile the Red Hat sources to make a similar (but not commercially supported) distribution. CentOS is free as in no cost.

        Both RHEL and CentOS are free/open source software. If you decide not to renew your RHEL license after the first year, you don't have to uninstal

  • If you If you're running a large number of RHEL boxes / virtual environments, you could split them between fully-supported RHEL and ones of
    the RHEL-clones like Centos or Scientific ( from CERN - Linux brought to you by particle physicists! That should be their tagline ).

    That way you have fully supported boxes for critical stuff and save some support bucks with some unsupported clone boxes / VMs.
    I don't see a lot of risk here - at least not any more than environments where the Dev boxes are smaller and chea

  • by MrCrassic (994046) <<li.ame> <ta> <detacerped>> on Friday January 22, 2010 @08:58PM (#30865782) Journal

    Linux, which is at the core of Red Hat’s software strategy, has never been a huge success on the desktop, and especially not on the business desktop. Red Hat officials have shrewdly maintained that desktop Linux is not a core focus for the company, but that virtualization and the facilitation of desktop and cloud operating systems applications are.

    As I know this will become a polarizing statement on this thread, let me try (try being the key word) to neutralize this quote.

    Red Hat is not implying here that desktop Linux is a failure (like it's subpoint headline apparently does). They are stating two important truths: (a) that Linux on the desktop has not taken off as much as some pundits have been forecasting for a while, and (b) that this goal is not part of their overall focus and won't be for some time.

    I don't agree entirely with this viewpoint, since Ubuntu and netbook-provided distributions have contributed to its significant increase in consumer presence. Regardless, Linux on the server is where it's at, and where Red Hat has had huge control over for quite some time. Thus, it's no surprise that they are flourishing at the moment, despite the current economic situation.

  • Doesn't this create a perverse incentive to create software that is complicated and requires lots of expensive support?

  • I'm still not entirely convinced that the free code + support business model works as well as the traditional licensing version. Here's some financial data from the last year.

    Microsoft
    employees 93,000
    revenue 58.4 billion = 627 956.989 per employee
    net income 14.5 billion = 155 913.978 per employee

    apple
    employees 35,000
    revenue 32.5 = 922 857.143 per employee
    net income 4.9 = 140,000 per employee

    oracle
    employees 73,000
    revenue 23.2 billion = 317 808.219 per employee
    net income 5.6 billion = 76 712.328

    • "I'm still not entirely convinced that the free code + support business model works as well as the traditional licensing version .."

      That's three companies out of how many that are making real money out of 'traditional licensing'. How many venture capitalists would be foolish to get into the Microsoft, Apple or Oracle market right now. As for 'traditional licensing', that was never the case. Software was originally given away with the hardware. I see the future of this business and the way for anyone els

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