How Red Hat Decides Which Open Source Companies To Buy

darthcamaro writes "You don't really buy an open source company — since the tech is all open. But then again, Red Hat 'buys' open source companies all the time, they just bought one this week. So when does it makes sense for Red Hat to buy a company versus just building it on their own? Apparently, it all comes down to community. 'When you buy an open source company, if the people aren't coming and passionate about staying then you spend a lot of money for what? Because you don't get a lot of intellectual property,' Red Hat CEO Jim Whitehurst said."

What a dumb statement

[HarrySquatter]

You don't really buy an open source company — since the tech is all open.

What a dumb statement. Buying an open source company is buying their copyrights, possibly any patents they hold and getting to acquire their people.

Re:

[Anonymous Coward]

Absolutely. I won't speak of all that legal stuff, however the human capital of not just individuals well trained, but trained also in working well with their team is worth a LOT of money. It can take years to get that cohesion that comes from developing good work atmosphere and team familiarity. Getting a whole shop that has years of experience together is extremely valuable.

Re:What a dumb statement

[Anonymous Coward]

Not to mention their customers, prospective customers, and the non-paying community of happy users who find and fix bugs, suggest enhancements, and spread the word about what a great product it is.

Re:

[Anonymous Coward]

I don't know if you actually read the summary, but you said the exact same thing he said, immediately after saying it was a dumb statement.

Redhat doesn't buy companies for the IP, they do it for the people.

Re:What a dumb statement

[rgbrenner]

Buying an open source company is buying their copyrights

^ This... plus.. you have to read between the lines of what red hat is saying.

If a project has a large community, it is because they have a lot of users.

Red Hat sells support.

A large community == users to sell support to.

Re:

[eric_herm]

Copyrights/brands do not have that much value most of the time, and RH already has a good brand, so adding more may dilute the current one ( see how most of the product are rebranded as RH-something for the enterprise version ).

Patents have value only if you use them, and there is a patent promise on Red Hat website about what they use patent for ( http://www.redhat.com/legal/patent_policy.html [redhat.com] ). The company is also one of the founding member of Open Invention Network and likely donated patents to the shar

Re:

[Grishnakh]

And finally, acquiring people is nice, but in most country, people are free to leave a company at will, and I am prety sure there is lots of example of people leaving after being acquired ( I think Oracle/Sun is a prime example of that, given some problem that some managers at Oracle caused ).

There indeed are plenty of examples of that (and yes, Oracle/Sun is the poster child), however I don't think the dummies running companies and making these decisions actually take this into account very much. Oracle o

Re:

[eric_herm]

Oracle didn't buy Sun for the people, there was patents involved, there was also the various trademarks and stuff like that, and they wanted to have a complete stack. However, people told me that Oracle was not a so bad place to work, but i guess the management didn't care about redundancy.

And regarding people leaving, I have also heard of the same pattern when Mandriva acquired Connectiva, ( or Linbox ), with high profiles coders leaving after a while. Sometimes, that's just management screw up ( or just r

Re:

[petermgreen]

The copyrights only have significant value if two conditions hold

1: The company has retained the power to relicense the main parts of the codebase (e.g. they have been very careful about getting "contributor agreements" from any external contributors) and it's affordable* to replace any parts of the codebase that are incompatible with propietry licenses.
2: There is a group of people who will pay to use the code under terms other than those in the opensource license..

* What exactly affordable means depends o

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[account_deleted]

Comment removed based on user account deletion

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[account_deleted]

Comment removed based on user account deletion

Built for sale..

[Dareth]

What I got from the article is that they are will to buy a company with:
an established community based product
centralized developers willing to work for Redhat

For companies that have distributed developers/contributors, they tend to just hire major contributors to steer it in the direction Redhat wants it to go.

Re:

[eric_herm]

To hire major contributors, or just to put people to work on feature. For example, take openstack. There is people working on this on the interoperability with various RH stack softwares ( http://fedoraproject.org/wiki/Features/OpenStack_using_Qpid [fedoraproject.org] ). By making sure standard are respected, there is less lock-in, and better software for everybody. Better for RH, since their clients can use their usual stack ( ie, the RH one ), better for the client cause they have more choice, better for the community, cause

Intangible Value != price

[Anonymous Coward]

As someone who worked in High Performance computing before turning to the dark side of IT/IP law, perhaps I can illustrate how intangible value is calculated

a) Patents - traditionally were the dividing line in the noo-sphere invention space marking where a claim was being worked. Apart from a signaling mechanism (mating call to VCs), most industry accept that the real-worth is the tacit knowledge in headspace of the invebtors

b) Copyrights - may be F/OSS but acquisition of legal ownership grants pararights o

People Red Hat employes is the reason we pick them

[ron_ivi]

We're a pretty heavy postgres shop, and Red Hat employing one of the top developers of that project (Tom) was the way we chose which distro to use (and actually pay for). Not that we actually needed such support (he gives at least as support on the project mailing list) --- but for marking reasons we needed *a* tier-1 distro with "official" "support" --- so we chose to support them based on them supporting Tom.

Re:

[ghn]

I think you would have more return on your money by sponsoring so called Tom yourself and using CentOS or Ubuntu or whatever other free distro.

My reasoning is, why pay for support if you don't need it? If you want to support postgres developers, support them directly.

Re:

[eric_herm]

Centos is not free, it is paid by Red hat ( cause packages and software do not write by them self ), so that also make sense to pay RH if people want to keep Centos alive.

And supporting alone a developper is slightly more expensive than paying a company that does it and that share the load among customers ( cause if the price of a RHEL subscription is counted a around 1000 to 2000$ per year, you still have to pay for his paycheck, for travel and sponsoring ( ie, getting to hackfest ), hardware, etc ), so I

Popularity before profit

[Mandrel]

Apparently, it all comes down to community.

This is increasingly true for all start-ups. Even if a start-up has no IP, and its platform can be easily cloned, it can be valuable solely from the users it's accumulated. VCs now look for at least one of the 3Ps: people, profit, and popularity. Get the people then find a business model to exploit them.