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Red Hat Software Businesses Linux Business Open Source The Almighty Buck

In Your Face, Critics! Red Hat Passes $1 Billion In Revenue 227

Posted by timothy from the flash-in-the-pan-I-tell-you dept.
head_dunce writes "Now that Red Hat has officially posted more than a billion dollars in revenue, ($1.13 billion to be exact), the company's PR department sent this funny list of quotes predicting doom. For instance, 'We think of Linux as a competitor in the student and hobbyist market but I really don't think in the commercial market we'll see it in any significant way.' Bill Gates, 2001."
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In Your Face, Critics! Red Hat Passes $1 Billion In Revenue More

In Your Face, Critics! Red Hat Passes $1 Billion In Revenue

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  • Red Hat? (Score:5, Funny)

    by itsmilesdavis ( 985700 ) on Thursday March 29, 2012 @07:50AM (#39507953)
    More like Green Hat! WOOOOO!
    • Or maybe...Black Hat? Black ink is used for positive numbers in accounting--that's why the big shopping day in the US is called "Black Friday."

    • Re: (Score:3)

      by Ihmhi ( 1206036 )

      If Red Hat had a sense of humor, they would make a new promotional video using a certain ABBA song.

      ~funky bass line~
      [Morgan Freeman]: In 2001 Bill Gates said Linux won't be in the commercial market in [touch of sarcasm] "any significant way".
      [ABBA]: Money money money mooooooooooneeeeeeeeeeey~
      [Morgan Freeman]: I don't know about you...
      [ABBA]: Mooooooooneeeeeeyy! Money money money moooonnneeeeeeeeey~
      [Morgan Freeman]: But I'd call 1 billion dollars of revenue pretty signficant.
      [ABBA]: Mooooooooooooneyy!
      [Morgan Freeman]: Make the smart choice. Make the significant choice. Red Hat.

  • Good for them (Score:4, Insightful)

    by Anonymous Coward on Thursday March 29, 2012 @07:52AM (#39507983)

    Redhat contributes a TON to open source projects, and a lot of the time I find their online documentation to be the best available. I am very glad they're doing well.

  • I wonder how much more they would have made if Oracle didn't rip them off. I dont count CentOS though. The vast majority of people using CentOS either can't afford Redhat or will move up when they can.

    • Re: (Score:2)

      by 0racle ( 667029 )
      Does anyone other then the most diehard Oracle customers even use Unbreakable Linux? I doubt Oracle's offering has had much effect on Red Hat's sales.
      • !!Anecdotal Disclaimer!!

        We're by no means a "diehard Oracle customer" (in fact, I can't stand Oracle), but we do use OEL for our Oracle database nodes, if for no other reason than to avoid a finger-pointing circle-jerk when Oracle determines a problem lies with the underlaying OS.

      • Re: (Score:2)

        by jd2112 ( 1535857 )

        Does anyone other then the most diehard Oracle customers even use Unbreakable Linux? I doubt Oracle's offering has had much effect on Red Hat's sales.

        Actually a fairly high percentage do, because Oracle licensing makes it MUCH more expensive on other OSes particularly on visualized environments.

    • I really wish Redhat had some much cheaper, "updates only" version of their software.. When I worked in Education, we had a version that was $50/year.. I would love something like that for my own personal use.. and maybe a $100/y version for companies.. You know.. Like Oracle Does with their clone of redhat..

      • Re: (Score:2)

        by Hatta ( 162192 )

        Isn't the point of Red Hat the support they provide? If you're not buying the support, why run Red Hat at all? Debian can do anything Red Hat can, and it's completely free.

        • Re:More (Score:4, Informative)

          by pak9rabid ( 1011935 ) on Thursday March 29, 2012 @09:23AM (#39509055)

          Isn't the point of Red Hat the support they provide? If you're not buying the support, why run Red Hat at all? Debian can do anything Red Hat can, and it's completely free.

          There are cases when you need to run a RHEL-compatible system, but don't want/need the expensive support contract from Red Hat (like when you have to have support for expensive, enterprise-level software where the vendor only supplies drivers in the form of a RHEL-compatible RPM). This is why projects such as CentOS exist.

      • I really wish Redhat had some much cheaper, "updates only" version of their software...

        Assuming you're not in need of software support, such a distribution does exist, it's called CentOS.

      • There is an "updates only" version, it is $350 / yr for a 2 socket server. Until about a year ago, this was the basic subscription that included web/email support.

    • Re: (Score:2)

      by 1s44c ( 552956 )

      I wonder how much more they would have made if Oracle didn't rip them off. I dont count CentOS though. The vast majority of people using CentOS either can't afford Redhat or will move up when they can.

      Or don't need the redhat support, or keep redhat on one machine for support and use CentOS on the other 3000 servers.

      CentOS to RHEL isn't a move up, it's binary compatible sameness except for a little artwork.

  • Red Hat also announced some donations (Score:5, Informative)

    by Red Storm ( 4772 ) on Thursday March 29, 2012 @07:59AM (#39508051)

    Red Hat also announced that they will be donating $100,000 to each of the following organizations; Creative Commons, Electronic Frontier Foundation, Software Freedom Law Center and UNICEF Innovation Labs. http://www.redhat.com/about/news/archive/2012/3/A-billion-thanks-to-the-open-source-community-from-Red-Hat

    • Re: (Score:3, Informative)

      by Logic and Reason ( 952833 )
      The way I read that announcement, Red Hat is donating $100,000 total, divided in some unspecified way among those four beneficiaries. Still a nice gesture, though.

  • Congrats (Score:5, Funny)

    by santax ( 1541065 ) on Thursday March 29, 2012 @08:00AM (#39508073)
    But, does it run linux?

  • Awesome.. but some perspective (Score:5, Informative)

    by rgbrenner ( 317308 ) on Thursday March 29, 2012 @08:01AM (#39508087)

    That's great that RH finally passed that mark... that's on top of the good news they've been announcing for the past few years.. from their revenue growth through the recession (thanks to the subscription model), to their entry into the fortune 500 [redhat.com].

    But does anyone here think Bill Gates or Microsoft stays awake worried about RH? They pulled in 72x more revenue, 159x more profits, and have 63x more cash on hand (50.69b vs 808m) than Red Hat. Microsoft even has a better profit margin than RH (32.5% vs 13.3%).

    http://finance.yahoo.com/q/ks?s=msft [yahoo.com]
    http://finance.yahoo.com/q/ks?s=RHT+Key+Statistics [yahoo.com]

  • Perhaps... (Score:5, Insightful)

    by jellomizer ( 103300 ) on Thursday March 29, 2012 @08:01AM (#39508093)
    Perhaps there is a billion dollars worth of revenue from the hobbyist and Student Market?

    What Red Hat did which was shift away from trying to compete on the Desktop Market (Microsoft bread and butter) and focus more on the Server Market where Microsoft while a major player has more of an equal footing. Where they had a lot of legacy Unix shops that wanted to get off Unix Platforms but still keep the Unixy goodness.

    In general most Novel Shops went to Windows, most Unix Shops went to Linux. By "most" meaning there are exceptions, and plenty of anecdotal stories. As moving to the other platform was much easier for the company.

    For new companies. They would split across Microsoft and Linux (With Red Hat offering enterprise level support) Some would go with Microsoft and Other with Linux...

    So in a competive market I am not supprised that Red Hat made money. They played smart business and they made money.
  • ... King George III probably said that those rebellious colonists in America would never amount to anything, either. Freedom rules.

    • ... King George III probably said that those rebellious colonists in America would never amount to anything, either. Freedom rules.

      Rules? Uh, no. Microsoft, Apple, IBM, Oracle... still way bigger. Saying that open source or free software as a business model "rules" is like comparing Switzerland to the US or China. Yes, it's great that it's a very free country and has been independent for many centuries... but it doesn't "rule" anything.

      • Apple, IBM and Oracle are all very dependent on open source. OS X wouldn't even exist without it. The open source movement is only a few decades old, yet it has transformed computing forever. The finance industry, as in the case of the NYSE, is dependent on it. That finance industry is far larger and more powerful than any nation. Just because open source doesn't stand as a single, monolithic entity doesn't mean it isn't a decisive force in the world today.

  • Umm (Score:5, Interesting)

    by Psychotria ( 953670 ) on Thursday March 29, 2012 @08:04AM (#39508127)

    To a large extent, Red Hat is cashing in on a much broader community effort that has developed Linux and sold it as a viable platform to software developers, says George Weiss, an analyst with the Gartner technology research firm. But Red had a hand in this. “Give credit to Red Hat for fashioning a business model that created value from subscription support,” he adds.

    Emphasis mine. I don't think that the success of Red Hat depended on Linux being a viable platform for software developers. Rather, it depended on Linux being a viable platform for servers (I'm not meaning to under-emphasise the desktop users, or the developers, here; all I'm trying to say is that the success of Red Hat probably has little to do with Linux being "developer friendly" and more to do with the server market [and all that entails]).

    • The success of Red Hat does not depend on them selling anything at all. That $1 billion is for services and support - the product itself is free.

      • The success of Red Hat does not depend on them selling anything at all. That $1 billion is for services and support - the product itself is free.

        I bet you 5 gold pieces that I can split a hair finer than you! ;-)

        • Re: (Score:2)

          by bmo ( 77928 )

          He's right though, and it's not splitting hairs.

          When you buy Server 2008, you buy a license and 5 CALs (minimum). For a grand. That's it. That's all you get.

          Support is completely separate with Microsoft, and have your credit card ready because it ain't cheap.

          --
          BMO

      • Re: (Score:3, Informative)

        by Red Storm ( 4772 )

        Not quite....

        Technically, Red Hat's "product" is a compiled copy the Linux kernel and associated Open Source Packages required to create a working operating system. Yes the source is free, and Red Hat does follow through on the GPL obligations, but on it's own the source is useless, you can't actually use it without you or someone else spending the time and effort to compile it first. Thus Red Hat is "selling" a compiled and packaged form of the associated source code, however it's sold in the form of a s

        • Re: (Score:2)

          by tlhIngan ( 30335 )

          Technically, Red Hat's "product" is a compiled copy the Linux kernel and associated Open Source Packages required to create a working operating system. Yes the source is free, and Red Hat does follow through on the GPL obligations, but on it's own the source is useless, you can't actually use it without you or someone else spending the time and effort to compile it first. Thus Red Hat is "selling" a compiled and packaged form of the associated source code, however it's sold in the form of a subscription whi

    • Re: (Score:3)

      by Kjella ( 173770 )

      I'm not sure there's a contradiction here, Red Hat obviously made their money on the server market as that was their specialization. But the reason they could specialize is that developers can pull Linux in the direction they want. You want it to run on embedded? Mobile? Tablets? Desktops? Servers? Supercomputers? On x86 or PowerPC or ARM or PDP-11? Linux has become its own gravity well, whatever you want to do you'd rather add that functionality to Linux than trying to roll your own thing. Ultimately that'

  • How could they not be successful? (Score:5, Interesting)

    by O('_')O_Bush ( 1162487 ) on Thursday March 29, 2012 @08:06AM (#39508155)
    I'm a developer (on RHEL 5/6) in a company on the same size order as MS that deploys RH or the CentOS derivative on the high tens-of-thousands of nodes scale.

    Congratulations and all, but how could you not be successful when providing such a superior product to your competition. RHEL beats MS server variants in every way for ease of development (integrating dozens of nodes is a breeze, IA is consistent and well documented), cost, features, and support (we can call up RHEL developers at any time to request they investigate problems and push out fixes on timely schedules).

    They are a great company, and don't make you feel dirty for using their product.

  • Interesting... (Score:4, Interesting)

    by fuzzyfuzzyfungus ( 1223518 ) on Thursday March 29, 2012 @08:12AM (#39508225) Journal
    What I find impressive about Redhat is not Linux volume per se(woah, you mean that a world with a zillion cheap webservers wants an x86 unix for free? I never would have guessed); but that they've continued to sustain demand for paid offerings in the face of free-if-you-bring-your-own-expert stuff(which is unattractive at a small scale; but becomes economic if you are big enough) and various 'appliance-ized' Redhat clones put out by the vendors of the software designed to run on top of them(eg. Oracle's database + I can't believe it's not Redhat offering)...

    It seems totally unsurprising that much of the internet hosting going on today wouldn't even be economically possible if they were paying a tithe to Redmond, and it is similarly unsurprising that vendors of expensive applications would really rather that you pay for their software, not for the OS it happens to run on. Much more interesting that there is a place for Redhat in all this...

  • Great News! (Score:3)

    by scubamage ( 727538 ) on Thursday March 29, 2012 @08:15AM (#39508267)
    Congratulations Bob and Marc! To this day RHEL is probably my favorite distro (not trying to start a distro war), and I've been using RH it since apollo. They were cool guys then, and I can only imagine they've stayed the same.

  • Not a Gates "prediction", still only 1% size of MS (Score:4, Insightful)

    by xxxJonBoyxxx ( 565205 ) on Thursday March 29, 2012 @08:34AM (#39508483)

    Two things:

    >> "'We think of Linux as a competitor in the student and hobbyist market but I really don't think in the commercial market we'll see it in any significant way.' Bill Gates, 2001."

    #1: That wasn't a "prediction." That was a positioning statement, meant for the ears of commercial buyers and software channels, that Microsoft will remove its good graces from anyone who tries to interfere with Microsoft's business operating system sales.

    #2: Microsoft revenues in Q1 2012 were $20B, or about 60 times Red Hat's. If anything, Microsoft is probably thrilled to have a relatively tiny, but still growing competitor in the market to keep the anti-trust folks at bay. (Remember those guys from about 10 years ago?)

    • Re:Not a Gates "prediction", still only 1% size of (Score:5, Insightful)

      by pscottdv ( 676889 ) on Thursday March 29, 2012 @09:44AM (#39509505)

      If anything, Microsoft is probably thrilled to have a relatively tiny, but still growing competitor in the market to keep the anti-trust folks at bay. (Remember those guys from about 10 years ago?)

      No. They are not. Because that $1 Billion revenue of RedHat's represents Hundreds of Billions of dollars of lost revenue to Microsoft. Every server running Linux is a server that MIGHT have a Windows license if free offerings such as Linux weren't so capable.

      Without RedHat and other tiddling (compared to Microsoft) companies improving Linux every day, Microsoft would be the highest revenue company in the world and their stock would still be increasing in value.

      • hundreds of billions? exaggerate much? A Windows Server Standard 2008 license is $700... for $1100, you can get 10 licenses. (from newegg)

        cheapest RH subscription: $350 without any support

        So even if every one of those RH clients bought Windows licenses 1 at a time, that $1b would only be $2b.

        • We're looking at this differently. I'm saying that if it weren't for RedHat and all the other people working on Llinux and/or other free offerings, Microsoft and proprietary Unix would be only choices for all those servers out there. Millions of them. And I doubt Microsoft would be selling licenses at 10 for $1100 if free competion didn't exist.

          Every sale RedHat and every other seller of Linux makes supports not only their paying clients, but scores of additional users who make use of the software they w

        • Except that MS can't sell the licenses for all their other products if the OS is RHEL.

          So, they lose the OS license, but also the licenses for SQL, and CRM, and Exchange, and SharePoint, and Terminal Services, and all the other stuff that might be running on there.

    • Re: (Score:2)

      by iserlohn ( 49556 )

      Actually, MS never had a monopoly in the server space and really has nothing to worry about in terms of anti-trust investigations. Outside of corporate IT (which itself is undergoing a huge transformation due to BYOD), corporate IT spawned app/web development (.NET/ASP), and gaming (which itself is debatable due to the looming death of dedicated gaming devices and the rise of smartphones and tablets), MS has no real momentum in software platforms.

  • Niche market (Score:2, Interesting)

    by magamiako1 ( 1026318 )
    The point being that Red Hat is not competing against Microsoft but rather they are filling a different market than Microsoft. Make no mistake that Red Hat software is cheap. The TCO is fairly high since Linux Admins tend to command a much higher salary, generally don't crossover as much (I know plenty of Windows guys that do all around IT and fewer Linux guys that know Windows....far-fewer), and require much more manual care than a Windows environment.

    I've found completely different purposes for Windows an

    • The TCO is fairly high since Linux Admins tend to command a much higher salary, generally don't crossover as much (I know plenty of Windows guys that do all around IT and fewer Linux guys that know Windows....far-fewer)

      Really? I've found it the complete opposite in my 12+ years of being a sysadmin...the people who started off from a linux background are generally good at being jacks of all trades, but the ones who started off from a Windows background aren't quite as well rounded. While I primarily do linux/unix work, my resume is also heavy into Windows stuff, so much that I went to a job interview once where the CIO/linux architect and his windows guru grilled me up and down on the stuff listed on my resume and at the

    • I know plenty of Windows guys that do all around IT and fewer Linux guys that know Windows....far-fewer

      Really? I find that very hard to believe. I've hired lots of Windows guys and not yet had one that had a clue what to do at a Bash prompt. On the other hand, every Linux guy has been in front of a Windows machine at some point. You can't live in this world without coming across Windows somewhere.

      • I guess it depends on where you are. Most of the Linux guys I know when you mention Active Directory start immediately jumping into LDAP without ever mentioning the fact that Windows' primary authentication mechanism is in fact Kerberos.

        That said, there's a wide variety of skill sets. Some of the deeper Linux gurus I know do indeed know that, but those people that "get it" are very few and far in between.

        I generally gauge someone's systems knowledge by throwing out a memory question. VERY few people underst

  • Well (Score:2)

    by ledow ( 319597 )

    Just goes to show that nobody can predict the future with any accuracy, eh? Which makes you wonder why companies would listen to them in the first place.

    Who would have guessed that a cheap, ad-supported Worms rip-off (which itself was a Scorched-Earth rip-off, etc.) would get 10m downloads in the first day of the release of its... what... fifth title? And make an awful lot of money. While the Worms sequels tended towards the dire themselves?

    Who would have thought that the idea of a Linux smartphone would

  • “Indeed, I would go so far as to say that very few open source startups will ever get anywhere near to $1 billion. Not because they are incompetent, or because open source will ‘fail’ in any sense. But because the economics of open source software – and therefore the business dynamics – are so different from those of traditional software that it simply won’t be possible in most markets.” – Glyn Moody

    There have been, in fact, very few open source startups to get to $1 billion. His quote seems right on.

    And before I get flamed, I and my family use Linux exclusively. I sold a mildly-successful, Linux-based business a few years ago.

    Of course, if you include any business for which open-source software is critical to its operations, like Google, Facebook or Amazon, then yeah, the quote is nonsense.

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