Red Hat

Sun Microsystems has adopted an ambitious business model that depends upon commodity open-source downloads serving as loss leaders and gateways for hardware and services revenue. According to a report in The Register, however, profits have been hard to come by for Sun, which may have been what scuttled its merger with IBM.

Using Red Hat as a foil, The Register suggests that the way forward for Sun, which has seen its proprietary businesses commoditized, may be to commoditize itself further:

The open source distribution model cannot generate the kind of profits that Sun's shareholders became accustomed to in the … Read more

Most vendors are already preparing for a tough Christmas.

Those selling Linux-based solutions, however, can expect to spread plenty of holiday cheer, according to a new report from IDC, "The Opportunity for Linux in a New Economy." (PDF)

Even as Red Hat recently talked up its impressive quarterly results, it's important to recognize that not all of Linux's success can be seen in corporate financial results. Much of the benefits of Linux comes from unpaid deployments, which continue to account for a healthy margin of total deployments:

Of course, as noted, there remains plenty of revenue … Read more

Like begets like, and in the software world, open-source purchasing begets even more open-source purchases.

At least, that's the lesson I take from a recent Piper Jaffray report that suggests JBoss customers plan to invest heavily in Red Hat technology.

Not only are JBoss customers more likely to buy deeply into Red Hat, which is not surprising (though for Red Hat, it must be gratifying), but they're also more likely to buy MySQL and less likely to buy from Microsoft.

This can't be good news for Microsoft, and it probably is one reason the company has become so aggressive with its intellectual-property portfolio. … Read more

Microsoft and TomTom have settled their patent dispute, including claims related to the FAT file system and Linux. But the rest of the open-source world, which could be affected, isn't ready to lie down and accept Linux's possibly besmirched reputation.

Red Hat, for its part, declares that "without a judicial decision, the settlement does not demonstrate that the claims of Microsoft were valid." And Pamela Jones of Groklaw, a highly influential open-source legal blog, deprecates Microsoft's claims ("What? You thought Microsoft's spin on things was always gospel?"), citing the Software Freedom Law … Read more

It's perhaps no secret that the enterprise sales model is broken. Software-as-a-Service (SaaS) and open source have picked the lock on the enterprise, enabling CIOs to try before they buy, disrupting the old model of paying far too much for demoware and roadmap dreams.

It's a welcome shift of risk from the buyer to the vendor, as Geva Perry highlights:

We're now witnessing an increasing trend of bottom-up sales. A casual decision made by developers on a day-to-day basis, not a grand strategy laid out by the CIO. Try-and-buy is the norm, and so are subscription payments … Read more

Update (8:13 PM on 3/25/09): Savio Rodrigues offers a more compelling reason than I do below for Red Hat's precipitous drop in net income: "interest income (on money sitting in bank) went from roughly $18 million down to roughly $5 million year-over-year." This follows on Rodrigues' excellent analysis of why Red Hat's net income is so far out-of-whack with its peers. Definitely worth reading.

Update (6:17 AM on 3/26/09): I heard back from Red Hat on the reason for the drop in net income. "The drop was due to … Read more

SAN FRANCISCO--A bad economy is good for open source, declared Red Hat CEO Jim Whitehurst in his keynote at Open Source Business Conference 2009, but open source's value proposition should play well in any economy.

At OSBC 2008, Whitehurst suggested that enterprise IT needs to join the open-source conversation, contributing code back to derive greater benefit than mere consumption of open source can offer.

This year, Whitehurst moved beyond this meme to focus on why enterprises should buy open source in the first place, never mind contribute open-source code.

Whitehurst pilloried the traditional proprietary sales model, a theme the Red Hat team has raised before, … Read more

SAN FRANCISCO--Novell CEO Ron Hovsepian kicked off Open Source Business Conference 2009 here on Tuesday, highlighting Linux momentum, even as the economy craters.

Despite some negative news in its recent earnings announcement, Novell's Linux business has been growing by roughly 30 percent every quarter.

Importantly, Hovsepian discussed innovations that Novell has released in SUSE Linux Enterprise 11 that make Linux the engine of a bold move into the data center and beyond.

Hovsepian highlighted some recent analysis from IDC suggesting that Linux and open-source software will continue to grow through the recession, but he emphasized that this growth isn'… Read more

Every year, spring brings gives us two things: another rendition of the Open Source Business Conference and rumors of Oracle buying Red Hat, plus various other activities related to open-source consolidation.

In years past, OSBC has taken flight with rumors of Zend (false!), JBoss (true!), MySQL (true!), etc. on the block, with Oracle often the proposed buyer.

This year is no different, as Barron's has obliged by printing yet another rumor that Oracle is planning to invade Raleigh, N.C., to take Red Hat captive.

The source of the rumor is Katherine Egbert, an analyst at Jefferies & Co. … Read more