
​Red Hat becomes first open-source company to make $2B - simonebrunozzi
http://www.zdnet.com/article/red-hat-becomes-first-2b-open-source-company/
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acomjean
I was at a business looking to switch from HPUX/ Solaris to RHEL (Red Hat
Enterprise Linux). We had some HPUX realtime(ish) extensions and used IPC
heavily and really used the scheduler/Processor set functionality in HPUX. The
scheduling was important, so transitioning wasn't going to be easy (endian
issues aside).

They sent a bunch of us to a week long Linux Internals course at Red Hat.
Really excellent class, knowledgeable instructor (turned us onto fedora, linux
weekly news ([https://lwn.net](https://lwn.net)) and centos before red hat
partnered with them). When the class wasn't exactly what we expected the
instructor took the last day to go over some of the processor scheduling/ real
time extension stuff we needed to know (My company's employees were the only
one taking the class). The OS transition was shelved for a bit and I ended up
leaving that company, but the course really changed my mind about that
company.

Good for them.

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rileymat2
Minor note. If I am reading the article correctly, it has revenue of 2B, not
earnings.

~~~
btian
Revenue is earning.

If you earn 200k a year, it doesn't mean you saved 200k.

~~~
coldtea
Words have specific meaning in finances (and in other field).

Not always the most common spoken definition...

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jedberg
Are there any open source companies that make even 1B a year? The reason I ask
is because anyone with a model of "open source our core product" makes me
concerned for their survival. It seems like a tough business model and Redhat
is the only (moderate) success I can think of.

When your biggest competitor is yourself at a $0 price point, how do you
compete?

~~~
vacri
You sell services rather than products. Businesses outsource all the time, and
why not outsource custom work to the same people who make the product you're
using?

You're not going to be in the $1B space selling services, but neither are you
at risk of extinction.

~~~
davidw
The problem with this is: billable hours are what make you money, not working
in the product.

Juggling those becomes very difficult.

I've been following this space for years, and there are no easy answers.

I think the model where the 'secret sauce' is proprietary, and you give away
the infrastructure, like, say, Ruby on Rails, seems to work ok. Produces some
good open source software and is still an 'easy'/straightforward business
model, because you're selling a product.

~~~
icebraining
_The problem with this is: billable hours are what make you money, not working
in the product._

The two are not incompatible. Most of our new features are paid for by our
clients, some of which we then include into our main product. Maintenance
comes from other sources of revenue, though - hosting, for example, since many
companies would rather not deal with that, even if they could.

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shmerl
Good. Some use Linux, and barely contribute back. Getting RHEL subscription is
a good way to do it, because RedHat does a lot of work on improving Linux.

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chris_wot
Man, what I'd do to work for that company! And I don't say that about many
businesses.

~~~
audidude
Best job of my career so far.

They pay me to continue working on my desktop Linux project (from the bay area
no less) and have in no way impeded my personal direction for the project.
Quite the opposite, I now have a team of people willing to help me move faster
by solving external problems as I reach them.

~~~
mhurron
> They pay me to continue working on my desktop Linux project (from the bay
> area no less)

How does Red Hat handle remote work?

~~~
cpitman
A massive chunk of our engineers are (globally) remote. A lot of communication
happens via mailing lists, many of which are the public upstream project
lists. There is also a lot of use of internal IRC servers for more real time
communication.

Outside of that there is also a fair bit of freedom/latitude for individual
teams to do what works for them.

~~~
nixgeek
I hear there's movement away from IRC and onto Slack, which is apparently
contentious internally. Interesting to hear nonetheless given it isn't FLOSS.

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eggy
Good for RH! AFAIR they abandoned the freely-downloadable Red Hat Linux, and
started charging for the pre-compiled versions of Red Hat Enterprise Linux
(RHEL), and this is when they started making money to be where they are today.
Didn't they have a falling out with Linus?

~~~
kbenson
That was really just rebranding. Red hat Linux split into Fedora (free) and
RHEL (for pay). Even so, the source for all the rpms for both distressing are
available, and CentOS has been using that to build their RHEL clone for years,
and has always had an amicable relationship with RedHat as far as I know.

I don't know anything regarding Linus.

~~~
dcgudeman
CentOS has been officially part Red Hat since 2014
[http://community.redhat.com/centos-
faq/#_centos_trademark](http://community.redhat.com/centos-
faq/#_centos_trademark)

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kristianp
What's so good about RHEL/fedora vs debian or ubuntu server, say?

~~~
Ologn
If you have hundreds of HP Proliant servers, all with the latest firmware
patches and some level of support, and they all run a supported version of
RHEL, with some level of support, and once a week a different machine crashes
and dumps the kernel core - if you have RHEL (and HP) support, you have a way
to escalate the issue. They have kernel programmers on staff who know what
errors might be in the kernel code that talks to, say, host bus adapters. What
does a normal corporation do in this circumstance if they are running Debian
servers?

Insofar as competition in this space, SLES has been popular in heterogenous
environments (a lot of Windows servers). Canonical and Ubuntu are newer
competitors on the scene. Companies have been using Red Hat for 20 years, they
are pretty good at their jobs.

Also, RHEL is a flagship but Red Hat sells support for other products like
JBoss.

~~~
jldugger
RHEL is 800 per server. If you have hundreds of these servers, you could pay a
developer 80k to sit around learning kernel development on the offhand chance
this comes up.

~~~
jon-wood
You could, but that's going to be the unloaded cost of a developer, add
another 80k for benefits, tax, and everything else that comes with an
employee. Even after that you've got a single kernel developer who _might_
have learnt enough about the particular part of the kernel you're having
problems with. Assuming its the kernel.

Either that, or pay 80k to Red Hat, who have dozens of kernel developers one
of whom probably knows about your issue, and if it turns out not to be the
kernel probably have someone on staff that can investigate that as well. Worst
case they know who to contact upstream to dig deeper into your issue.

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cpach
See
[https://news.ycombinator.com/item?id=11343346](https://news.ycombinator.com/item?id=11343346)

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IamFermat
When you think about it, it's crazy it took them this long to make $2B in
revenue. It took them 23 years since it was founded in 1993. Facebook hit $2B
in revenue 6 years. Which is crazy when you look at the comparison and RH is
the most successful open-source co. Open-source is a failed model for
commercial success.

~~~
rwmj
Another way to look at it is that proprietary software vendors drain massive
amounts of money out of the world, far in excess of the value they generate.

~~~
infinite8s
Huh, why is that? Corporations don't like spending money just for the hell of
it.

~~~
rwmj
Lock in, and the power of a government-granted monopoly.

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kachnuv_ocasek
What does 'open-source company' mean? One could claim that Microsoft is one as
well.

~~~
ludamad
Red Hat open sources all customer facing software they create. When Red Hat
buys a company, it is expected that they will open source its software
products. I think "open source company" is only apt.

~~~
nixgeek
With the acquisition of Ansible, we haven't seen Red Hat releasing the
products (Ansible Tower). Is that just a case of they haven't got around to
it, or is this a new strategy?

~~~
toredash
They will open source it, but then can't just publish all the code without
reviewing it. What if there is some code there that they can't legally but
into the public space? It's legalwork, that shit takes time

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otterley
Mods, please edit the title: that's not what the article says. A $2B company
is not identical to a company having $2B in earnings.

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fred_is_fred
But isn't Apple an Open Source company? ;)

