Open Letter to Red Hat 58
tilly writes "The recent article, An Open Business Plan for Red Hat, Inc. (which appeared on /. as What if Red Hat Bought SCO) has inspired an interesting follow-up article on Freshmeat. "
disclaimer:Hemos owns shares in Red Hat. Not that makes any difference in what I post, but, hey, I figured you'd wanna know.
What if RedHat bought applications? (Score:2)
Re:What if RedHat bought applications? (Score:1)
Acting like a 18-billion dollar company (Score:3)
Yes, this means acquisitions. I like the Borland idea -- sure they make other products, but who doesn't? In any event, well-planned and managed acquisitions are a great way to grow the business and have it not seem like your company is standing still. Of course, a poorly-handled acquisition (SGI's handling of the Cray situation stands out in my mind) can be fatal to your company, so make sure you get some serious business experts in line before going this route.
I'm actually beginning to think that SGI might not be such a bad target -- their stock price is relatively low, the morale of their shareholders has got to be at an all-time low after Rick's defection. If Red Hat were to buy SGI (and complete the spin-off of the Cray and NT lines to narrow its focus a bit), they'd gain access to all the goodies IRIX has to offer, a huge foot in the door of the server market (sure, they'd have to keep shipping with IRIX for a few years), and the chance to port some neat-o "wow" type packages to Linux.
The drawback is that Red Hat probably doesn't want to move into the hardware market as well -- this is likely a Good Thing(tm). Of course, my logic still holds for VA Systems once they're worth a mint...
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Well, I guess I'll repeat myself. (Score:3)
My comments:
GCC is interesting. As long as there are CS majors/grad students coming out with compiler knowledge there will be at least some people willing to work on compilers. Plus there's Cygnus. Red Hat has limited resources (a large market cap but negative profits), and they seem to be doing o good job with what they have. They pay people to work on the kernel and the foundations of things like GNOME and KDE. They pay people to do the strenuous work that is either boring (not that Alan Cox's job is boring) or requires a "get it right the first time" attitude. These are the things that make sense to pay people for. GCC has been doing fine.
Also, for the subscription method. If Red Hat did that, they would die. Simply because stores do not want to sell something that will make people not come back. They want to sell a physical product that means that people will come back to the store. If Red Hat offered a subscription service, not as many stores would carry it. This would severely hurt Red Hat since they are currently very reliant on stores. It's the same reason they have the no-support option only availible online--they don't want to confuse customers or annoy stores.
Subscription system (Score:1)
I also definately agree: the contribs are a mess.
Sounds familiar (Score:1)
lose -> win? (Score:2)
(remove tongue from cheek...)
Why (Score:1)
Re:What if RedHat bought applications? (Score:1)
Forget SCO ... Buy Corel (Score:1)
Different game now... (Score:2)
They now have to keep their upsurd stock value in mind now when making business decisions.
This can be an advantage, and a disadvantage.
The nice thing, is it keeps the company on its toes. Redhat now has a *lot* of people to answer to, giving them more incentive to grow and innovate. On the other hand, they may be forced to do things that were not included in their original business plan. In order to maintain such a lofty market cap, they may be forced to acquire another company... maybe even one much larger than themselves.
Redhat is probably not ready for that.
Shelf life, a plus or minus? (Score:3)
Wait, stores carry magizines, and news papers, why wouldn't they want a product that a subscription. Say, $30 a copy insted of $100 for a four copy subscription.
If anything, I think stores would be MORE likely to carry it, because they know the shelf life dates. They wouldn't have the fear that it will sit forever, they could only order a few copies at a time, and less right before they know a new issue will come out.
My school bookstore for one has stocked boxed copies of Red Hat right before the upgrade from 5.0 to 5.1, right before 5.1 to 5.2, and right before 6.0 too. I KNOW first hand they are pissed off because they are always a step behind, and Red Hat already releases faster than other software on the shelf and its an unpredictiable schedule. They don't mind other software as much, but Red Hat has made them look stupid.
On the other hand, even the grocery store carries magizines and other periodicals, because they know if they don't sell, next month they will buy less copies, and the shelf life is known.
So, I guess I don't agree witht that.
Re:Forget SCO ... Buy Corel (Score:1)
Note: I speak only for myself. This is only my opinion and not Corel's.
Always willing to spend money... (Score:2)
Buy Borland, Cygnus, or SCO? Borland will come around on their own or die. Cygnus is doing just fine. SCO? hahah, that's a support headache, you can't just buy a revenue stream either, there are a lot of costs that come with it. I don't know what they'd get out of cygnus, the risks are great. Borland, SCO, SGI, etc.. they will come around on their own or they will stop doing business, it will be better if they do it on their own that if you try to force them by buying them.
RedHat should definitely keep contributing to projects, GCC would be a great one to start helping with. They should contribute to any project that helps them fix a weakness, right now that would include a GPLed office suite. Keep doing GNOME. They should hire some writers and get to work on a good set of Linux manuals.
I really don't see what they are going to get out of buying another company, there will be cultural problems, debt to assume, customers to support, product incompatibilities, and other problems. Buying another company (like the ones that have been suggested) is a step in the wrong way because instead of focusing on GNU/Linux they will spend a huge amount of effort focusing on making the investment pay off.
Sign some deals with hardware vendors. Maybe sign a deal with Inprise/Borland or Cygnus, no more. Keep doing what they are doing and if money is really just burning a hole in their pocket then buy a support provider.
The subscription idea isn't half bad either, MS makes a ton of money from it. Hell that's the way I got slackware for a long time. The details would need to be polished a little, but quarterly errata and updates with a couple major releases would be pretty nice. Include the cute little CD book/box that comes with MSDN and charge a couple hundred dollars..
Pay your investors a dividend!
Merging updates/ and redhat-contrib/ (Score:1)
I don't think it's a good idea to merge updates/ and redhat-contrib/ as the author suggests. updates/ should be reserved for, well, updates to the packages supplied with a typical Red Hat distribution. redhat-contrib/ is a nice way to provide things they can't include in the distribution, for licensing or other reasons.
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Re: RedHat Acquiring SGI (Score:2)
RHAT's recent market capitalization is roughly 5B on a stock price of ~$70 with $12M in revenue. They have about 140 employees and their book value is negative.
Compare this with SGI. Their market capitalization is roughly half RHAT's (which illustrates the silliness of RHAT's stock value). SGI had reveunes of 2.75B last year and has about 9000 employees (after layoffs). SGI is a much bigger company, they just layed-off about 8X RHAT's workforce. They also have half a billion in cash.
In short, RHAT's stock value may be high, but high more on hopes more than anything. Compared with assests and sales, their stock is worth little in real cash. Considering how quick the open source movement is, how fast could RedHat be replaced by a newer better distro? When will their support services start paying off?
A better buyout target is Mandrake. They make a better RedHat than RedHat.
Compare:
SGI's Profile [yahoo.com]
RHAT's Profile [yahoo.com]
why? (Score:1)
I'd love to send MY company a letter to hint... (Score:1)
An interesting piece... but... (Score:2)
People in general want the newest, most up to date set of applications, and if anything they use at all has been updated in the last three months, they want it.
This may be true for users (and it's certainly true for me! ;) ), but believe it or not, business users (or rather, the folks who make the business decisions) do not constantly want the latest and greatest foobar.rpm installed on their systems. They want something stable they can stick with for a while, and cut down on support costs. The costs associated with constantly making sure applications are up to date are bad enough - now think about supporting all these new applications; or training the users every 4 months when the updates come down the wire. If something isn't broken, why should you fix it? Not only that, RedHat will also have to eat these training costs, as they will have to ensure they can support each and every version that may be floating around out there. There aren't many savings in this model for the consumers OR the retailer.
That being said, I'd LOVE a subsription. I download Redhat usually because I can't be bothered buying a new box set every 6 months. Perhaps they could market it as a sort of "developer" edition and include lots of technical documentation and resources?
Re:What if RedHat bought applications? (Score:1)
They benefit from both. (1) Better development tools and platform = better apps = more Red Hat CD's sold (2) Better apps = more Red Hat Cd's sold. It makes most sense to support both, since they now can. Of the two, apps are the big weak point (though better source level debugging is a crying need on the development front). Linux needs KOffice and GnomeOffice. It needs those both to be better, lighter, tighter, faster, more useful, more stable, more scriptable and better integrated than Microsoft Office. Both groups could do worse than look closely at Microsoft Works - this is a seriously slickly designed package. Then go beyond it. Gnome already has a spreadsheet that looks and acts like Excel although it's far from finished. Good start - now make the ui scriptable and expose the internal api via Corba - do whatever it takes to let the rest of us geeks take it further. I'm starting to ramble, I'll stop now.
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Re:Always willing to spend money... (Score:1)
First you're right, they should keep doing what they're doing because it's obviously working.
Second of all, changing stripes to become an aquisitive monster is out of character and may backfire. So you're right again, buying weak companies may only buy them weaknesses.
Support and applications - yes. They do need these.
Exclusive deals with hardware? I say not, too reminiscent of another OS vendor.
As for deals with Cygnus, Borland et al, you're right again. No more than deals, aquisitions could accomplish little more than making RH seem like a grasping monster.
Subscriptions? Good for those who don't download and add in updates on the fly. A definite maybe but not something I really can see as useful to anyone but the laziest of end users. When lazy end users start buying Linux subscriptions, it will be a totally new market.
-M
Watch this get moderated down by RedHat lovers... (Score:3)
Well, unfortunately, barely recognizable doesn't cut it. Time to get out the hacksaw and tear that hammered together writing apart.
Robert says: dump money into GCC. RedHat lives or dies by GCC.
The REALITY: Good MORNING, WORLD! Let's see. Last I heard, FreeBSD, NetBSD, OpenBSD, RedHat, Debian, Slackware, Caldera, SuSE, and some others use GCC. Now in case you cluebies haven't noticed, egcs is now gcc, and egcs is about as useful for, say, Alpha, as bootable AIX tapes on a Dell PowerEdge. gcc may as well be written off as a loss, because Linus doesn't suggest, recommend, or advise compiling your kernels with egcs. Neither do I. So it's going to end up in a big bloody argument probably. Fun fun fun.
Robert says: dump money into a GPL office suite.
Reality: Money doesn't grow on trees, and in case you haven't noticed, business users are buying StarOffice and Corel's products. That's just a waste of resources if you want to replace Windoze, which is RedCrap's big happy goal.
Robert says: Make what they have now work better.
Reality: What, were you born yesterday? Why do you think they hire people in the first place? Hint; it's NOT to do tech support!
Robert says: subscription plans, this is important.
Reality: HA! AHAHHAHAHAHA!! REDHAT? Give you a reliable product at a fair price?! AHAHAHAHAHAHAHAHAHAHAHHAHAHAHAHoh gods, I'm laughing so hard, I'm *crying*. Here, it's the cluephone. It's for you. RedHat is in this for money, not fairness. Money comes before all things Linux as far as RedHat's concerned. If they have to spend money to fix bugs in their distribution, it costs them money. So they rush to release, include bugs, and make up for it with the profits from the next version. Which in case you haven't noticed, is now double what the last version was. Can't wait till RedCrap switches to AIX-style licensing. "A two-user RedHat 7.0 license is now $80. A four-user license is now $200..."
Robert says: open up the RPM standards.
Okay, Robert. You see this? This is a cluebat. *WHACKWHACKWHACK* Next time, research before writing. Saves you a lot of pain, as you now see. RedHat has *never* been tight-lipped with but a few specifics on RPM. However, they tout RPM as the standard, when it's NOT. RPM is ineffecient, difficult to work with, and impossible to upgrade with. RPM should be dumped altogether, and the *spit* Linux Standards Base *snigger* needs to get off their asses and decide on a standard. The chances of that happening before 2010? About one in six trillion *against*.
Robert says: Cygnus and Borland/Inprise would make great acquisitions.
Robert, once again, money does NOT GROW ON TREES. Whether or not Borland/Inprise has been in decline, it COSTS MONEY. Lots and LOTS of money. Furthermore, Inprise is a faltering company, and is NOT a good buy. Linux is NOT the OS that will make or break any company's long-term profits and stability. You people need to get a grip and freaking realize this NOW. Linux is a media-darling because it's anti-Microsoft and as long as Microsoft is on the hot seat, Linux will be hot. And as soon as Microsoft is off the hotseat, some loyalists will stay, and the rest will dump Linux like a bad habit.
Robert says: Compaq or Dell would be a nice partner.
I reiterate; DO YOUR RESEARCH. Compaq *AND* Dell already HAVE partnerships with RedHat. THANK YOU, DRIVE THROUGH! Gods. I'm getting really frustrated reading this blatant lack of research.
Robert says; support the LSB.
The day I support the LSB is the day the LSB gets off it's ass and actually does some work that people follow that's of use to me. Now, the chances of THAT happening anytime soon, is so incredibly low, it would probably factor out to be six pages of digits ending in ':1', *against* it happening.
So.. next time somebody wants to write this kinda crap, do your research FIRST, so people like me don't have to basically *flame* you for misinforming. Or better yet; don't tell RedCrap how to run their business. They seem to be doing just fine without your input, which I'm sure you emailed to them directly, and were politely thanked for your 'valuable input.' They don't care, folks. They're gonna do it their way, and all you do is contribute to the growing flames of media hype that make people who actually *know* and *use* Linux, for the most part, SICK.
-RISCy Business | Rabid System Administrator and BOFH
Re:An interesting piece... but... (Score:1)
end user market. They're after enterprises and large companies - places where they can sell their support
offerings. An end user is more likely to hit up the folks on one of the comp.os.linux* groups than they are to
call up Red Hat support - because it's cheaper.
In order for Redhat to succeed, or more to the point, come even close to justifying their market value... they need to go after the end users. My grandma needs to understand, and use the product (with phone support).
Giving these people that service is going to become their lifeblood. They have to become conveniant to use (hence, people will pay for them).
That is the big picture.
Heh (Score:2)
You do not speak for me, and I am a 'real' linux user and developer.
The pot and the kettle.
Dividends. (Score:1)
Yield = 1%
Actually, dividends give an important service to investors. The actual yield is secondary.
We know that companies can fiddle with their earnings through legal accounting... but you can not fiddle with dividends. Watching a company's dividend history can be very important. Often, this is more informative than looking at their year to year earnings.
Look for companies that have been able to increase their dividends from year to year, and by a good percentage. This shows a lot of confidence (from the company) in their ability to grow.
Dividends also benefit the long term investor during corrections and down times. You buy a stock at 100, and it quickly falls to 80. If you are able to buy more at 80, the dividends insure that you have made a profit, only if the stock merely attains a price of 100. More incentive to take advantage of those dips!
Your well intended flamebate ;-) (Score:2)
Really? IPO brought in $$ that are numbers I am not use to counting up to, sure haven't seen than many 000's in a long time. Uh, Considering thier "worth" and the cost of paying someone to develop say, KOffice full time, it's not a big expendature. KOffice will be developed with or without Red Hat. If they negociate a salary or contract with the people who are already developeing it so they could do it full time, I doubt it would make a big dent in thier budget. If they try to do it "in house" it would be stupid, they need to just support the people who already are use to doing it for free.
open up the RPM standard
Did I imply they were closed? I have looked inside them, I know there not. I know RPMs can do a whole lot more than Red Hat does with them on a regular basis. ;-) And, RPM is not that difficult to work with, I've rolled a few, never found it that hard. Matter of fact, when you really look into the specs for them, you can see that there is enough in there that most people can benifit from them, and .src.rpm (find your rpmrc, change your flags, feel the speed...). Dependancacy headaches might need a tweak of the format (but frequent releases of CD sets would make up for it on the short term end).
Compaq *AND* Dell already HAVE partnerships with RedHat.
Again, fully aware of that. But I don't think that I would agree the partnerships are being as exploited as they should be. When I see more than "oh, we ship a couple products with Red Hat, what's a kernel optimization?" maybe I will think it's actually making a differance like it should.
Nice to see you get soo excited though. Too bad I have to write most of you comments off, you seem a little to pre-occupied with degrading the distribution to be taken seriously about how to get them to be a successfull buisness. To be expected I suppose, not everyone wants to see Red Hat succeed.... Lots of people want to see it fail.
Can't wait till RedCrap switches to AIX-style licensing. "A two-user RedHat 7.0 license is now $80. A four-user license is now $200..."
Heh, yea, great idea, and let the #1 selling open source project shoot it self in the foot, loose it's GPL community support, and follow the buisness plans of the 1970's in the comming century... There's a model for growth. Well, growth of some grass over the grave of the company anyhow, because it will be a nice peacefull resting place with few visitors.
Red Hat is NOT, Not, not, not, your traditional UNIX. Red Hat is tetering on mass market apeal. Red Hat needs to make things efficent like no ones buisness, and yes, that means "Give you a reliable product at a fair price?!". If they don't, thier ethics will be in question BIG time, and people WILL be able to call them "the next Microsoft" and get away with it. (Yet another reason to break the molds of traditional software houses, and start using a buisness model that is more closely suited to open source, that being a "publishing house" model). 75 cents a copy for the local paper, my gosh, there is no way these people can be making money... ;-P Yea, RIGHT...
Next time, research before writing.
Why do I respond to trolls... ;-) Your right, I should do some research, it is my job after all, but it involves VOC extraction, HSGC, and Henrys Law... Aparently you have mistaken me for a journalist, or someone who gives a crap about what holes there are in the story. Soo sorry I didn't hand hold you and tell you in detail where all the holes in GCC w/ Alpha are, and why Dell and Compaq partenerships are weak, and what Red Hat's financial resources are to be spent on growth, and why SuSE is happy with RPMs but developers aren't because of compatibility issues, and how development dollars can be used wisely vs. squandered, and why making news by making market moves makes sence in the trifold aspect of getting good press-gaining community support-filling thier current product lackings. I guess I assumed that most intellegent readers would already know these things, and be able to fill in the gaps rather than read a 20 page essay with footnotes.
Actually, as fun as it is to sit here and debait, I gotta cut it off here, seeing as how I highly doubt that it'll make a differance.
BTW, no offence taken, least I got someone off thier butt and got them to think about if Open Source is viable at all in the marketplace, even if they don't want to think about it.
Re:why? (Score:1)
Why it's a good Idea (buying SCO) (Score:1)
1- They have the market capital (the money)
2- They gain the specialised workforce
3- They then have businesses (a lot of them!) as clients
4- The UNIX trademark (I think it is still owned by SCO, right?)
5- The Monterrey project (as outlined in the original article, well written too!)
Playing like the enemy is sometime morally adverse, but sometimes, it's necessary. If the French army, back in the Moyen Age, had played it's cards like the English invasion army, maybe they would not have been defeated by a smaller force...
Out of context? Maybe not.
Micro$oft is one of the major competitors of Red Hat. And vice versa. Red Hat may have to brace for impact when Microsoft start throwing stones at it.
Microsoft has a market capital of 474B$ (this morning, 9:34AM). Red Hat is at 5B$. In business, it's usually big fishes that swallow small ones (I did says *usually*).
So when Red Hat went public, it's to be worth something, to be on the map financially.
A good move.
Bernard Munger
CIO
Julien Inc.
Re:Watch this get moderated down by RedHat lovers. (Score:1)
Robert, once again, money does NOT GROW ON TREES. Whether or not Borland/Inprise has been in decline, it COSTS MONEY. Lots and LOTS of money. Furthermore, Inprise is a faltering company, and is NOT a good buy.
I'm not going to argue whether Borland is a good buy or not, but it doesn't require lots and lots of money to acquire them, just a decent amount of stock. Right now, RedHat's market capitalization is 29 times higher than Borland/Inprise!! Even if they paid a large premium, the cost would be less than the daily fluctuation of RedHat's stock.
Moderate this guy up ;-P (Score:2)
Heh... to respond... It's called "armchair quarterbacking." Sort of an American past-time. Yea, it's lame, yea, it's silly, but... it can be fun too.
Almost like Anonymous Coward in this case could be Bob Young himself... or better, Bill Gates. Soo true, eveyone has an opinion, I'm just making myself a little more visable so it's clearer to all how far I can really shove my foot in my mouth ;-)
I've been in school WAY too long... It's about time for me to get out of the chair, and shut the hell up, and start doing something myself.
Start thinking like a business (Score:2)
Besides, the other poster at this level is right: Red Hat needs a sturdy foundation, and SGI could provide that for them. SGI has a low stock value because they'd percieved as a company without anything really exciting going on that's being managed by a bunch of chimps with typewriters (having worked there, I can tell you this isn't far from the truth).
Red Hat or another Linux company (and again I'm thinking specifically of VA Systems) would benefit from SGI's rep with users and its core of developers. They'd have to prune their new acquisition a *lot*; get rid of Cray and the NT division, for starters. But it still could work with effective management.
Besides, high on hopes counts for something -- the money I made riding RHAT up is still real money. The real test now is to see if Red Hat can use that huge advantage to grow their business before those hopes dry up.
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RedHat should NOT tie itself to specific products (Score:2)
As a distribution, RedHat's best bet is to skim off the cream from all the Linux projects, maybe support some of the key ones indirectly by giving money, and integrate everything. If RedHat tries to take over a project, it hurts the project's credibility, since it could be seen as serving only RedHat's interests, and limits RedHat's perceived options, since RedHat would be seen as having a vested interest in their own projects.
For example, RedHat's connection with Gnome has hurt both Gnome, Enlightenment and RedHat. Rightly or wrongly, Gnome 1.0 was perceived by many as a buggy product, released early to fit RedHat's schedule. Conversely, RedHat's choice of Gnome as their default desktop provided an opening for Mandrake to step in. Corporate and newbie buyers want the most stable, easiest to use desktop. They don't want to think that their distributor has a vested interest in pushing their own, possibly inferior product. They want to think that their distributor is objective, and chooses the best stuff for them, so they don't have to think about it.
(Gnome has gotten better since the 1.0 release, but the damage to their reputation still lingers. My point is not that Gnome is good or bad, but that it's close association with RedHat hurts both RedHat's and Gnome's reputation.)
For similar reasons, I don't think RedHat should buy Cygnus. It's bad enough that people think of gcc as the "Cygnus" compiler; it would be worse if it became the "RedHat" compiler.
Instead of looking at itself as a software development company, RedHat should look at itself as a service company. Don't buy Borland, SCO, Cygnus, or whatever. Instead, spend money on relationships with major PC vendors, beef up your support staff, improve documentation, consider subscriptions, etc. Also, look at IBM's model, and consider developing custom solutions for companies, but using whatever tools are the best, or what the customer wants, not pushing your own stuff.
In short, the standard software will take care of itself in the long run. Focus instead on the added value you can offer as an integrator, store house of Linux expertise, support provider, etc.
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My thoughts (Score:2)
Here's my overall issue: Red Hat has a business model. They want to provide support and services for Linux. She the fundamental question is: how to they increase their Linux services business?
A focus on gcc (as per point 1), for instance, would put Red Hat in conflict with Cygnus, which has made a very successful business for years by controlling the market for gcc support and expansions. Cygnus knows that its future is directly dependent upon these compilers, so they have a very aggressive plan of improvement for the GNU compiler system already. Additionally, what CEO says, "Gee, I think that operating system sounds great for our business, but I'm not happy with their compiler's adherence to ANSI standards, so let's go with a different choice instead"?
I think that points 2 and 4 of this article are examples of the way in which many users prefer to look at Red Hat as a software distributor, rather than a services company. RHAT has never claimed that their market would be the desktop. Why? Because servers need expensive support from the vendor, while desktops don't. That's why the company is willing to see others provide the productivity software, while they stick close to the more lucrative server/OS strategy. The issue of a subscription is more of something that SuSE would do (actually, I believe they already do it). Why? Because SuSE appeals to hobbyists (I'm a SuSEr myself). They bundle all the software on Earth, much of which is irrelevant to businesses, and they don't worry too much about integrating the various packages or providing graphical administration. But business unsers want polish, ease of use, and itegration, not just the latest thing to come out. They also see upgrading as a difficult process to be undertaken only when compelling. Remember, millions of copies of DOS shipped last year! Why? Because many folks couldn't find a reason to upgrade from even this incredibly outdated technology. These are not customers who feel the need to go from kernel 2.2.11 to 2.2.12 as soon as the new one comes out. Also, retailers HATE that Linux distros go from 6.1 to 6.2 before even the 6.0 version sells out. It makes their inventory worthless. If you look through any major computer store, you'll probably still find copies of OpenLinux 1.3 on the shelves (possibly being resold under a different name). I've seen CompUSA put OpenLinux 1.3 next to OpenLinux 2.2 and charge MORE for the old version!
I have to disagree most strongly with point 6 for many of the same reasons that Mr. Scherrey pointed out. Borland's strength is still in Windows software development tools, a business about which Red Hat knows nothing at all. Worse, they're a software developer, and RHAT does NOT want to be in the software business, they want to be in support. Even more importantly, both Cygnus and Borland already recognize the importance of their Linux strategies. Cygnus is NOT going to drop Linux support in gcc or Code Fusion any time soon, because that's the vast majority of their market base! Similarly, Inprise is already committing to a future as a cross-platform tools provider. As an independent company, they will contribute at LEAST as much to Linux as they could if they had been acquired. Red Hat needs to acquire targets who, if left alone, will NOT help the Linux OS as much as they could. Any acquisition would also have to address Red Hat's desperate need to gear up its consulting arm.
I have mixed feelings on the LSB. It's somewhat disappointing that they have not yet been able even to articulate a vision for how they see the Linux standards process playing out in the future. If they could create a base that moves quickly and allows vendors to add their own value, it could be interesting. However, Red Hat holds such a dominant position in the market that they can afford to make their own standards and have others follow them. Look at "Code Warrior for Red Hat Linux"! Red Hat never asked them to support their distro alone; Metrowerks just didn't want to commit right away to supporting more than one system. The bigger challenge will be Corel's Linux, which has big corporate backing, but doesn't even use the RPM format. If Corel and Red Hat could agree on standards, however, that would basically force the LSB members to follow along.
Well, like I said, it's great to see an increasingly open discussion of these issues. I hope these discussions set a precedent for more, similar debates in the future.
--JRZ
RH should not transport products from Windows (Score:1)
At first, a Borland + Corel metastasis interested me. Young's vision of oss, if he can keep it, definitely out-flanks the much shallower business visions of either Borland or Corel, so a RH acquisition should improve either of them noticably. However, he will also have to want to maintain and service all the pre-existing Windows-customer problems, which would definitely crap up the dream.
In the alternative, RH should keep to its 3 to 5 year perspective, and keep building on oss and x-suites. BTW, I am definitely not a RedHat fan. Although I respect Young's vision, he is by any standard a minority partner, and I continue to remain deeply suspicious of his new business partners, who control an overwhelming majority.
Re:My thoughts (Score:1)
A few points:
1. SuSE does have a graphical configuration tool, Yast. I don't care for it much myself, but they've spent a lot of time and money on it. (As an SuSE user, I'm sure you know this).
2. It seems like the people who purchase Microsoft subscriptions are mostly corporate developers. We have a full cabinet full where I work. True, we don't actually upgrade our NT servers and whatnot that often, but management and the developers like to know that if they have a problem that requires a patch, they have the CD on hand. In fact, most (all?) of our software purchases here at Enterprise Rent-A-Car are subscriptions. So I think that, based on empirical evidence, subscriptions appeal to corporate users as much or more than hobbyists.
Fundamentally, though, I agree that RedHat should think of itself as a services company, not a software company. Which makes the whole RedHat Labs/Gnome/Enlightment fiasco puzzling. If RedHat wants to focus on servers, why spend money developing a desktop, especially an instable window manager (Enlightenment) that excells at providing eye candy and hogging resources? Don't get me wrong -- I like Enlightment, and Gnome is OK, but would you want to run it on a server? (Of course, Raster left RedHat, so presumably E will not be the default RedHat window manager in the future).
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Subscriptions (Score:1)
Note that Microsoft does subscriptions for large companies.
Re:What if RedHat bought applications? (Score:1)
Re:Even better, make it QPL! (Score:2)
The definition of freedom, according to the AC: "People should have the right to think what they want, say what they want, and do what they want, as long as it agrees with what I think, say and do."
I can't believe these people sometimes. Qt frees their source code and you're still bitching about it. What do you want? A rubber biscuit?
Re:Shelf life, a plus or minus? (Score:2)
And to the other person who replied to me (sorry, I'm lazy), that works for businesses, but they're not the customers who would be buying it in the store anyway (I guess with Linux this is different, but the principle is the same). We're talking normal consumers.
Re:An interesting piece... but... (Score:1)
The other thing to remember is that people like grandma are not likely to get online and review the tech notes and discussion forums. If RH is in this for the money, which I believe them to be, then they have to work both market segments: large corporations and the end users. Opting for one or the other would be just as foolish as investing your life savings in a single stock. If that was the best way to go about it, mutual funds would not exist.
That is the big picture, a little bit more in focus.
Re:An interesting piece... but... (Score:1)
I'm not saying support end users and helping grannies get Linux up and running is a bad idea... I think it's great! I'm saying RedHat can't afford to do that right now. It's just not where the money is.
Market Cap and Acqusitions (Score:1)
While everyone is racing to come up with companies that Red Hat can/should/must purchase in order to survive, perhaps a little financial realism should creep into the conversation.
Regardless of Red Hat's market cap ($5.1 Bn as I write this), it is not as if they have this much cash or tangible assets sitting around to go shopping with. While lots of deals are made with the funny-money that is internet stock, if you look at the most outrageous, you find vastly overvalued firms buying other vastly overvalued companies with their overvalued stock. While the (supposed) dollar figures make the news, for the boards and analysts that are negotiating the terms of the deals, the current share price and market cap are largely ignored.
If a company approached SGI with an unsolicited bid, SGI would do an independent valuation of what the potential acquirer is offering, including cash, stock, brand, synergy, economies of scale, cultural fit, distribution channels, workforce alignment and overlap, external alliances, potential accounting and tax issues, international exposure, etc.
While you may buy and sell RHAT for whatever the current market price is, and that times outstanding shares is technically defined as its Market Cap, do not think for an INSTANT that any sane Board of Directors would take that overvalued paper as representing anything near what Red Hat would actually be bringing to the table, and ultimately giving to SGI's shareholders.
SGI's Board has a fiduciary obligation to look out for its shareholders, and the value of its shares, including long-term results. To the shareholders of SGI, Red Hat as a whole is worth maybe $1 Bn, if that. Buy SGI? A much better idea would be for SGI to buy Red Hat (Global Crossing, anyone?)
Remeber when looking at the crazy valuations of Amazon, Ebay, etc. that they have positioned themselves as a strong brand, a company with diverse alliances and growth opportunities, and perhaps most importantly, as companies that are the undisputed leaders in their sectors, with scales that are hard to match, and size that potential entrants/competitiors will be hard pressed to overcome, even in the long run.
Red Hat has none of this. They may have a strong brand, but it is certainly NOT the same as an Amazon or Ebay are in their fields. Entrance is easy, there are virually no scales to overcome, capital investment is small, competition is easy, and Red Hat has no real advantage other than some level of mindshare, which is tenuous and fleeting, particularly in this business sector and as young as Red Hat's is.
Red Hat, although having a lot of acquisition resources in the linux space, is simply not able to pursue major acquisitions at this point. They will most assuredly have a hard time properly managing their OWN growth in the near future, much less absorbing any companies of any significant size.
Invest in Cygnus, MetroWorks, distribution channels, RHLABS, R&D: Yes.
Try and purchase any company valued at more than $100 million: forget about it.
Steve Hamlin
http://hamlinx.com [hamlinx.com]
New Opportunities (Score:1)
This is a strategic issue. It really boils down to what technologies there are out there that could be released as open source that would strategically move open source and linux forward.
Borland might be such a candidate. They have some very good technology and over $70 mil in the bank but are basically languishing. Buying them out as a wholly owned subsidiary with open source products could revitalize an otherwise underappreciated asset base.
The intriguing thing about this approach is the power of open source, particularly GPL. With this world class technology cross fertilizing other open source projects you could have a huge multiplier effect in a couple of years.
The key here is what can Red Hat do that can move the entire community forward. When open source thrives so will Red Hat.
Re:Well, I guess I'll repeat myself. (Score:1)
With increasing complexity of future releases it will be even worser with time. Bugs of distro will not be fixed, new unstable features will pile up and result will be catastrophic. I would prefer situation with less new things, better quality for old things and minimum bloat.