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Linux Powers Red Hat Over $1 Billion - Why Open Source Matters

Red Hat Billion

From the 'Open Source $$' files:

Today Red Hat will officially become the first pure play Open Source and Linux vendor to top $1 Billion in revenues.

WOW.

We've known this day was coming for a while, Red Hat has continued to thrive despite the economic downturn. In fact, the economic downturn has had a positive effect for Red Hat as enterprises around the world turn away from proprietary solutions and choose open source.

Red Hat's first $Billion is a major milestone for Red Hat. It's also a major milestone for the Open Source and Linux industries.

While there are lots of companies that profit from Open Source, Red Hat has stood (almost) alone in its stance of making all of its software Open Source (eventually). Open Source isn't just a marketing slogan or some kind of Open Core trick for Red Hat, it's at the core of everything they do and it's at the core of their $1 Billion in revenues this year.

Open Source delivers better software, but that's not the whole story when it comes to Red Hat, is it?

Over all the years that I've followed Red Hat, from their founder Bob Young, to former CEO Matt Szulik to current CEO Jim Whitehurst, the message that has remained the same is that Red Hat isn't just about the bits.

In the proprietary world, software vendors make their money from the bits, Red Hat doesn't. Red Hat's model is all about support and adding value to the bits with services. It's a model that 10 years ago seemed odd to some, but Red Hat has proven them wrong haven't they?


At various points in time, Microsoft, Sun/Oracle and even other Linux vendors have attacked Red Hat and tried to steal or erode their share. To date, those efforts have had little success on Red Hat's bottom line.

Red Hat's success is not an example that all open source companies can or will follow. There seems to be a never ending congo-line of companies lately that embrace the open core model, where bits are sold. It's an easier model for some that just can't build the same momentum and support model that Red Hat has built.

Other Linux vendors, like SUSE or Canonical for example can and will make money too, but neither of them approach Red Hat's level of success today. Only time will tell if they ever do. In the meantime, open source companies everywhere will likely now point to Red Hat (as they long have) as the standard bearer for what it means to be an Open Source company that can stay true to their values and also deliver value to investors.

 

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals Follow him on Twitter @TechJournalist.

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