Red Hat slips into the red (News.com) [LWN.net]

News.com looks at Red Hat's quarterly results and prospects for the near future. "Even though [Red Hat Linux 9] will boost Red Hat revenue, the company's attention will remain on the premium product, Chief Executive Matthew Szulik said in an interview. 'You're not going to see any aggressive promotion with it,' he said. Advertising and promotion might increase sales, but it also increases expenses 'in a business that is not that interesting to the company,' Szulik said."

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Red Hat slips into the red (News.com)

Posted Mar 26, 2003 22:31 UTC (Wed) by brouhaha (subscriber, #1698) [Link]

If the mainstream Red Hat distribution is now "a business that is not
that interesting to the company," maybe I should consider switching to
Debian. I've been a Red Hat customer since their 2.1 release, not out
of blind loyalty but because I think they've done an great job and
provided an excellent value. But Mr. Szulik's words don't inspire
confidence that this will continue to be the case.

Red Hat slips into the red (News.com)

Posted Mar 27, 2003 0:34 UTC (Thu) by apw (guest, #9469) [Link]

Don't fall for the soundbite -- let's do some critical thinking...

It's all in the timing of the markets. Enterprise server and workstation are higher margin and steadier revenues than the consumer/hobby markets. The consumer/hobby markets are just not increasing at attractive rates now. That market is still important to RedHat because it seeds their enterprise market. I've been using RedHat since 3.0.3 and have recommended it to others because it's a good distro and I've drawn customers into sales in their enterprise markets.

So, put yourself in Matt's shoes. He has to allocate money out to his teams. If there are teams that are pulling in good margins and increasing sales, you put the largest chunk of your eggs into that basket. If you are developing a longer term market, you only commit a small amount of your eggs to that basket -- especially when that consumer/hobby market has an expensive support cost that can overwhelm the revenue.

The consumer/hobby market is a tougher sell...you have to convince people to switch away from their comfort zone (windows). Not everyone is wired like the readers of this site...they don't open the hood of their workstations and they don't have servers and they may have heard of a firewall but couldn't name a single traffic control. Most of the folks who can do all that stuff are the guys/gals who support and operate in the enterprise server/workstation markets.

So, all in all, Matt is just telling us that he's focused where he's making money and continuing to put a little bit of support into the rest of the markets. He's probably putting more real bucks in today to consumer/hobby than Bob Young did for all markets in the early days, plus some of the bucks spent on the enterprise/ workstation development spill back into the consumer/hobby product.

Cheers...APW