Red Hat Opts for Pragmatism Over Glitz (NY Times) [LWN.net]

Ashlee Vance takes a look at Red Hat and the "consumer rat race". "Behold Jim Whitehurst's iron-willed pragmatism. Mr. Whitehurst, the chief executive at Red Hat, sees the Linux revolution taking place with mobile devices. In 2009, Linux will land on more cellphones and mainstream computers than ever before — thanks to the efforts of companies like Google with Android, Canonical with Ubuntu and Intel with Moblin. As this onslaught of devices threatens to make Linux a household name, Red Hat, the most prominent Linux brand on the planet, will keep its iconic logo locked away in the data center, running on servers."

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Red Hat Opts for Pragmatism Over Glitz (NY Times)

Posted Apr 8, 2009 5:39 UTC (Wed) by qg6te2 (guest, #52587) [Link] (7 responses)

It is not a major strategy focus for us, Mr. Whitehurst said. I have refocused us on the corporate market and away from the consumer market.

There is no doubt that the corporate market is currently the money-maker for Red Hat. I'm also glad that Red Hat funnels some of the profits into supporting Fedora and Linux in general. However, apart from branding issues that Whitehurst mentions, it's still very puzzling as to why Red Hat doesn't want to do profit-oriented activities in the consumer space. Why are RH employees contributing so much to Linux desktop efforts? Are the profits really zero in the consumer space, or is Red Hat waiting to pounce until Ubuntu carves out a decent slice within this space?

Red Hat Opts for Pragmatism Over Glitz (NY Times)

Posted Apr 8, 2009 6:57 UTC (Wed) by xoddam (subscriber, #2322) [Link]

I think all Red Hat is waiting for is the right opportunity. The corporate desktop may seem staid and pinstriped, but there is plenty of incentive to push desktop productivity work to the next level through investments in Fedora. The Enterprise Linux product will catch up and provide what corporate customers want, when they are ready to pay for it.

That Red Hat itself doesn't get much revenue from low-margin and high-risk early-adopter consumer products that result from its work is not a significant loss for the company. The Free Software ecosystem does benefit from this even as the businesses that take the high-profile risks bloom and wither.

I believe Red Hat's commercial caution will pay off handsomely in the long term. When the consumer market seeks real expertise at the right price, they will know where to find it.

Red Hat Opts for Pragmatism Over Glitz (NY Times)

Posted Apr 8, 2009 13:15 UTC (Wed) by lmb (subscriber, #39048) [Link] (5 responses)

The desktop is still a major attractor for developers and a sustainable community. It does not mean it is profitable as a sales target market.

Red Hat Opts for Pragmatism Over Glitz (NY Times)

Posted Apr 8, 2009 16:36 UTC (Wed) by jspaleta (subscriber, #50639) [Link] (4 responses)

http://lxer.com/module/newswire/view/91429/
John Hull of Dell, October 2007

"Another area that has changed is our thinking around OS support models. Traditionally for enterprise Linux customers, if we sell them an OS on their system, they expect and demand a high level of operating system support. That is certainly not the case for our Ubuntu Linux customers, who have stated very loudly that, for the most part, they do not want to pay for OS support, and would rather get support from the community. That is a much different support model from what we have traditionally used, but is certainly one that we have embraced."

I realize that quote is a year and a half old, but its the most salient quote I can find that speaks to the idea that selling software support services for the consumer desktop is going to be a good business strategy. It's not. I think the Dell experience with Ubuntu speaks directly to that. Does it make long term business sense for a software service companies like Red Hat, or Canonical, to be in markets that aren't interested in buying support services?

Enough people are out there willing to pay for linux pre-installed hardware for Dell to offer it, but those customers are not looking for any paid software support. I'm sure Dell is making money off those Ubuntu boxes as an OEM. I wonder if Dell's margins on each Ubuntu pre-install sold are better than for each WinXP/WinVista unit sold.
Begs the question, is Canonical making any money from those Dell pre-installs if customers aren't buying support contracts and getting all their support from the community directly? Is Dell paying Canonical for engineering services directly? I don't think there is a clear understanding about how revenue is shared in the Dell/Canonical partnership.

I completely understand Canonical's no acquisition cost model, and its way to build brand value. But what I don't understand is how they plan to turn that brand value into dollars large enough to sustain the business long term. If community support is good enough for consumer linux customers, where is the value-add that the for-pay Canonical services provides? Is there anyone reading this that is paying for an ongoing support subscription to Canonical for a desktop or netbook system?

Too bad Canonical is still being pretty cloak and dagger about UbuntuOne services, maybe that will finally be a services framework by which Canonical unlocks the Ubuntu desktop/netbook brand value. How long with the market wait before a 3rd party webservice developerers starts targeting that built up Ubuntu brand value? Dropbox already seems like a pretty popular service for Ubuntu users as a storage provider.

I think the more sustainable model for consumer linux is a model where the device manufacturers are also the software integrators for their own devices and the operating system development and quality assurance becomes a sunk cost that is recouped across sales volumes. Maybe that is exactly how Canonical is positioning their OEM services, and maybe the OEM services is where the bulk of the current Canonical revenue is coming from. I hope so. If OEMs are getting higher revenue margins on their linux units versus the windows units then the system integrators like Xandros, Linpus and Canonical need to get a piece of that in order to keep the relationship sustainable.

-jef

Red Hat Opts for Pragmatism Over Glitz (NY Times)

Posted Apr 8, 2009 17:02 UTC (Wed) by dmarti (subscriber, #11625) [Link] (2 responses)

Look at this story: Ubuntu Goes Enterprise. What if they're planning to give away the OS and charge ISVs to distribute through their click-n-run warehouse/app store service?

Re: Red Hat Opts for Pragmatism Over Glitz (NY Times)

Posted Apr 8, 2009 17:59 UTC (Wed) by nevyn (guest, #33129) [Link]

So a story from over 6 months ago, suggesting that Canonical are going to do something similar to https://www.redhat.com/wapps/isvcatalog/ means that they are going to make money for the desktop?

I appreciate everyone loves Canonical and hates Red Hat, but that doesn't change the reality that nobody is willing to pay for the desktop (and thus. nobody can make money from it).

Red Hat Opts for Pragmatism Over Glitz (NY Times)

Posted Apr 8, 2009 18:06 UTC (Wed) by jspaleta (subscriber, #50639) [Link]

if they can sustain a business by charging ISV's for shelf space in their virtual retail store.. more power to them.

Hopefully they are getting more interest than the very few packages listed here:
http://archive.canonical.com/ubuntu/dists/dapper/partner/...
or here:
http://archive.canonical.com/ubuntu/dists/hardy/partner/s...
or here:
http://archive.canonical.com/ubuntu/dists/jaunty/partner/...
or here:
http://shop.canonical.com/index.php?cPath=19&currency...
Awesome! DVD and codec software bundles I can legally use in the US! How many US users of Ubuntu who did their own Ubuntu installs do you think actually purchase that stuff? My understanding is this is the software the Dell pre-installs since the more commonly used software is potentially patent encumbered and a problem for Dell to ship out of the box.

I can't wait to compare Canonical's effort in the space with Red Hat's existing experience building its ISV partner channel in RHX:
https://www.redhat.com/wapps/isvcatalog/browse.html?actio...
http://press.redhat.com/2008/06/11/rhx-lessons-learned/

Care to wager if Canonical's Enterprise services teams will be as forthcoming about the evolution of their service offerings as Red Hat has been with the development of RHX? The Canonical ISV partnership push is really aimed at the LTS release. Would you call the number of listed packages in that partner repository for hardy a marked success? I wouldn't. The number of partner packages listed for Hardy is quite..meager.

What happened? http://ubuntuforums.org/showthread.php?t=746493
From the discussion it looks like the partner repository concept has been around since at least Dapper 6.06 (3 years) and Hardy was suppose to be the "hit the ground running" moment..and the partnership hasn't grown at all. I think anyone who really cares about the ISV market should contrast that experience with the Red Hat's RHX experience and decide for themselves who has the model that best services the combined interests of users and ISVs.

I think it's pretty safe to say that ISV's aren't falling over themselves to pay for Canonical's packaging services and enter into the partner repository. Maybe there really are a mob of ISV's waiting for the next LTS, a year from now, to jump on board and get into that partner repository..along side..the flashplugin package that's sitting so very lonely in the Jaunty partner repository today.

-jef

Red Hat Opts for Pragmatism Over Glitz (NY Times)

Posted Apr 9, 2009 8:17 UTC (Thu) by Janne (guest, #40891) [Link]

Again spreading FUD about Ubuntu/Canonical? Well, color me surprised... Your constant whining made it easy for me to steer clear of Fedora, thanks!