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> The Linux distribution merely is the vehicle and the basis, the actual business is well on top of it though, on another level. Check out what redhat.com and s

by zapita 8y ago

> The Linux distribution merely is the vehicle and the basis, the actual business is well on top of it though, on another level. Check out what redhat.com and suse.com present on their respective homepages Those homepages are a picture of where Red Hat and Suse want their business to go - not where it actually is. In practice both companies have struggled to diversify into broader “enterprise solutions”. After 20+ years, the vast majority of Red Hat’s revenue still comes from the good old RHEL subscription. Everything else - storage, java, openstack, containers, IDEs - is still far behind. They seem to be betting everything on Kubernetes being the new Linux, but we tend to forget just how huge Linux was in the late 90s... And how huge Red Hat was in the Linux world. This time they’re a medium-sized fish in a medium-sized pond. Kubernetes is cool, but is it cool enough to get Red Hat from $3B to $10B in revenue, with hundreds of vendors pushing their own Kubernetes service? Personally I don’t see it. As a point of comparison, Vmware is nearing $8B and has successfully diversified into storage and networking. It’s a testament to the incredible momentum of Linux adoption on the server, that even Suse (a distant second in the business of commercial Linux) has survived this long without any meaningful diversification. Personally I think we’ll see Red Hat getting acquired in the next 5 years, while they can still a good multiple on the “cloud native” hype. If they wait too late, the reality will set in that Openshift revenue can’t grow fast enough to offset a shrinking RHEL business. If they wait too long, they will end up like Suse.

yuhong 8y ago
Yea, I mentioned Novell in my essay and how its revenue declined quickly after they moved away from NetWare, including that both NetWare and Windows used Client Access Licenses that Linux lacked.
- johnvanommen 8y ago
  Novell is still around. HPE sold off a bunch of their software assets to their parent company. Their specialty seems to be nurturing software that's been around for quite a while, that a lot of people take for granted, but is still a big part of many many enterprises. Micro Focus also owns Attachmate, a company that was big in the 90s.
greenhouse_gas 8y ago
>Personally I think we’ll see Red Hat getting acquired in the next 5 years, It would be interesting to see what would happen with linux after that, as they are one of the biggest (if not the biggest) donors to Linux, and while you'll still find Enterprise Linux for the Server (whether it's them or some successor), they are also responsible for things like Linux on the Desktop and FOSS in general, so projects which don't directly make money like Cygwin, gtk, gnome, gcc, and PulseAudio may be in danger.
- zapita 8y ago
  Meh. Linux itself doesn’t need Red Hat anymore. Upstream got good enough that you just don’t need to stay on proprietary backports for years and years just to keep your service reliable and secure. These days most of Red Hat’s value add on Linux is to keep deprecated features alive for their large slow-moving customers. Sure they also contribute cool bleeding edge work, but nothing that couldn’t be picked up in a heartbeat by a team at Oracle, Google, Alibaba, or a hundred other systems companies. As for those satellite projects you mention, in my experience the dependency on Red Hat is a self-fulfilling prophecy. Their employees tend to close ranks and crowd out other contributors in the projects they sponsor. If RH disappeared tomorrow, for many of those projects the result would be more diverse contributors, with a healthier mix of ideas and priorities. It might help shock the Linux community out of the cultural rut it’s been stuck in.
  - yuhong 8y ago
    Systemd is probably worth mentioning here.
    - yellowapple 8y ago
      I won't be missing it much.
  - bkor 8y ago
    > Meh. Linux itself doesn’t need Red Hat anymore. It seems you're ignoring the vast amount of work Red Hat contributes as free software. See e.g. the amount of work put into the kernel: https://lwn.net/Articles/742672/ https://lwn.net/Articles/742672/. They've been increasing the amount of contributors while they've been expanding. Currently it's a pretty big company, so quite a huge amount of contributions. Further, any company they buy they tend to make the software free software. You're being dismissive without any substance IMO.
jasonjayr 8y ago
Who would acquire Red Hat? Oracle? I shudder to think of what would happen to all of Red Hat's IP under Oracle's control ....
- yellowapple 8y ago
  Death. That's what would happen. See also: Sun Microsystems
  - yuhong 8y ago
    Mentioned that in the essay as well BTW.
- pjmlp 8y ago
  Yeah, because IBM would have been so much better.
- johnvanommen 8y ago
  I could see Microsoft acquiring Red Hat. Nearly every company that I've worked for purchases MSFT licenses and RedHat licenses. If MSFT acquired them, it would allow them to offer either option in the enterprise. Also, Microsoft's cash cow isn't Windows, it's Office and Outlook. So an acquisition of Red Hat might give them an opportunity to make inroads into Linux with those products. Last but not least, there's plenty of Linux running on Azure, a RedHat acquisition could play into that strategy.
nunez 8y ago
Red Hat is in every F500 business in a big way. they aren't struggling.
- zapita 8y ago
  I said they’re struggling to diversify. RHEL is certainly in every F500 business, and remains a large and profitable operation. But there’s no growth left in RHEL, so they need to diversify. They’ve been trying for years, and don’t have much to show for it.
  - nunez 8y ago
    I'm not so sure about that either, though. Let's take a look at a slice of their portfolio: - Ansible for decentralized configuration management (not as popular as Chef, but still popular) - OpenShift Enterprise for container orchestration (gaining a lot of traction) - CodeEnvy, a cloud-based IDE - JBoss, a legacy Java application server (used at every boring billion-dollar co you can think of) - Innovation Lab: a somewhat expensive service for large corps to see how the latest IT trends are applied
    - johnvanommen 8y ago
      Selling Ansible is tricky, because a lot of customers aren't interested in Tower. Ansible is very very popular, but because it's agentless, it's difficult to monetize. Also, from what I've read, companies like Puppet haven't been able to turn a profit.
    - zapita 8y ago
      As I said in another comment, all of the products you listed, plus their Openstack offering which you didn’t mention, add up to 22.4% of their revenue as of their last quarterly report. So using very naive math, that’s an average of 5% of total revenue per product across 5 diversified products. That’s... underwhelming. Especially since, as you say, a product like Jboss has been on the market forever... When you look beyond marketing hype and focus on hard financial data, you can make fascinating discoveries :-)
ItsMe000001 8y ago
> In practice both companies have struggled to diversify into broader “enterprise solutions” I don't call growing to a thousand people from the low few hundred that I knew "struggling". RedHat is well over ten thousand employees. If the Linux distribution really was the center they would only have a few hundred both, which they had when the Linux distribution was not just at the center, it WAS the center of the business. So clearly this is no longer the case.
- zapita 8y ago
  That makes no sense. They had a few hundred employees because their Linux business was small. Now their Linux business is huge, so they can afford to hire more people. Some of those people are sustaining and growing the core Linux business, and others are working to develop new businesses like storage, openstack, middleware, configuration management, containers etc. None of those new businesses are anywhere near self-sufficiency. They are all funded primarily by the core Linux business. If you look at their 2017Q4 results, it’s very telling: out of $772M of revenue, the combination of Openshift, Openstack, Ansible, Java middleware, IDEs and every other product in the “application development and emerging technologies” group added up to $173M. That’s 22.4% of their revenue coming from their entire “next-generation” portfolio combined. Everything else is basically RHEL. Hopefully this gives you a better picture of how they pay for their 10,000+ employees.
  - ItsMe000001 8y ago
    > That makes no sense. To me your reply is what makes no sense. I worked for one of those Linux companies. A few hundred people is all it takes to have a Linux distribution business. More people than that is what makes no sense. So if they now have sooo many more people it means that most of them do things not related to the Linux distribution business itself. Yes, the Linux still is at the core, but I don't count people supporting computing center operations as doing work for the Linux distribution - that is an entirely new layer well above it. Your accounting seems to be based on the idea that just because it's all centered around the Linux distribution it means you can call it all "Linux distribution business". I vehemently disagree, as I said, I consider that well above the level of merely selling Linux distributions. I saw how that business looked like from the inside, and what they do now does not remotely look like they do the same thing. Well, of course they still do, what I mean is the share of the overall activity of the company. The amount of people needed to build and maintain the Linux distribution has not changed significantly. They don't need more package maintainers or significantly more kernel hackers. The people they hired don't work on the Linux distribution but on things made on top of it, whether that's other software products or services.
johnvanommen 8y ago
I did OpenStack at HPE, watched as Suse acquired the software but not the employees, then landed in a job where I'm now doing Red Hat products. You're bumming me out lol

by zapita 8y ago

yuhong 8y ago

Yea, I mentioned Novell in my essay and how its revenue declined quickly after they moved away from NetWare, including that both NetWare and Windows used Client Access Licenses that Linux lacked.

johnvanommen 8y ago
Novell is still around. HPE sold off a bunch of their software assets to their parent company. Their specialty seems to be nurturing software that's been around for quite a while, that a lot of people take for granted, but is still a big part of many many enterprises. Micro Focus also owns Attachmate, a company that was big in the 90s.

greenhouse_gas 8y ago

>Personally I think we’ll see Red Hat getting acquired in the next 5 years, It would be interesting to see what would happen with linux after that, as they are one of the biggest (if not the biggest) donors to Linux, and while you'll still find Enterprise Linux for the Server (whether it's them or some successor), they are also responsible for things like Linux on the Desktop and FOSS in general, so projects which don't directly make money like Cygwin, gtk, gnome, gcc, and PulseAudio may be in danger.

zapita 8y ago
Meh. Linux itself doesn’t need Red Hat anymore. Upstream got good enough that you just don’t need to stay on proprietary backports for years and years just to keep your service reliable and secure. These days most of Red Hat’s value add on Linux is to keep deprecated features alive for their large slow-moving customers. Sure they also contribute cool bleeding edge work, but nothing that couldn’t be picked up in a heartbeat by a team at Oracle, Google, Alibaba, or a hundred other systems companies. As for those satellite projects you mention, in my experience the dependency on Red Hat is a self-fulfilling prophecy. Their employees tend to close ranks and crowd out other contributors in the projects they sponsor. If RH disappeared tomorrow, for many of those projects the result would be more diverse contributors, with a healthier mix of ideas and priorities. It might help shock the Linux community out of the cultural rut it’s been stuck in.
- yuhong 8y ago
  Systemd is probably worth mentioning here.
  - yellowapple 8y ago
    I won't be missing it much.
- bkor 8y ago
  > Meh. Linux itself doesn’t need Red Hat anymore. It seems you're ignoring the vast amount of work Red Hat contributes as free software. See e.g. the amount of work put into the kernel: https://lwn.net/Articles/742672/ https://lwn.net/Articles/742672/. They've been increasing the amount of contributors while they've been expanding. Currently it's a pretty big company, so quite a huge amount of contributions. Further, any company they buy they tend to make the software free software. You're being dismissive without any substance IMO.

jasonjayr 8y ago

Who would acquire Red Hat? Oracle? I shudder to think of what would happen to all of Red Hat's IP under Oracle's control ....

yellowapple 8y ago
Death. That's what would happen. See also: Sun Microsystems
- yuhong 8y ago
  Mentioned that in the essay as well BTW.
pjmlp 8y ago
Yeah, because IBM would have been so much better.
johnvanommen 8y ago
I could see Microsoft acquiring Red Hat. Nearly every company that I've worked for purchases MSFT licenses and RedHat licenses. If MSFT acquired them, it would allow them to offer either option in the enterprise. Also, Microsoft's cash cow isn't Windows, it's Office and Outlook. So an acquisition of Red Hat might give them an opportunity to make inroads into Linux with those products. Last but not least, there's plenty of Linux running on Azure, a RedHat acquisition could play into that strategy.

nunez 8y ago

Red Hat is in every F500 business in a big way. they aren't struggling.

zapita 8y ago
I said they’re struggling to diversify. RHEL is certainly in every F500 business, and remains a large and profitable operation. But there’s no growth left in RHEL, so they need to diversify. They’ve been trying for years, and don’t have much to show for it.
- nunez 8y ago
  I'm not so sure about that either, though. Let's take a look at a slice of their portfolio: - Ansible for decentralized configuration management (not as popular as Chef, but still popular) - OpenShift Enterprise for container orchestration (gaining a lot of traction) - CodeEnvy, a cloud-based IDE - JBoss, a legacy Java application server (used at every boring billion-dollar co you can think of) - Innovation Lab: a somewhat expensive service for large corps to see how the latest IT trends are applied
  - johnvanommen 8y ago
    Selling Ansible is tricky, because a lot of customers aren't interested in Tower. Ansible is very very popular, but because it's agentless, it's difficult to monetize. Also, from what I've read, companies like Puppet haven't been able to turn a profit.
  - zapita 8y ago
    As I said in another comment, all of the products you listed, plus their Openstack offering which you didn’t mention, add up to 22.4% of their revenue as of their last quarterly report. So using very naive math, that’s an average of 5% of total revenue per product across 5 diversified products. That’s... underwhelming. Especially since, as you say, a product like Jboss has been on the market forever... When you look beyond marketing hype and focus on hard financial data, you can make fascinating discoveries :-)

ItsMe000001 8y ago

> In practice both companies have struggled to diversify into broader “enterprise solutions” I don't call growing to a thousand people from the low few hundred that I knew "struggling". RedHat is well over ten thousand employees. If the Linux distribution really was the center they would only have a few hundred both, which they had when the Linux distribution was not just at the center, it WAS the center of the business. So clearly this is no longer the case.

zapita 8y ago
That makes no sense. They had a few hundred employees because their Linux business was small. Now their Linux business is huge, so they can afford to hire more people. Some of those people are sustaining and growing the core Linux business, and others are working to develop new businesses like storage, openstack, middleware, configuration management, containers etc. None of those new businesses are anywhere near self-sufficiency. They are all funded primarily by the core Linux business. If you look at their 2017Q4 results, it’s very telling: out of $772M of revenue, the combination of Openshift, Openstack, Ansible, Java middleware, IDEs and every other product in the “application development and emerging technologies” group added up to $173M. That’s 22.4% of their revenue coming from their entire “next-generation” portfolio combined. Everything else is basically RHEL. Hopefully this gives you a better picture of how they pay for their 10,000+ employees.
- ItsMe000001 8y ago
  > That makes no sense. To me your reply is what makes no sense. I worked for one of those Linux companies. A few hundred people is all it takes to have a Linux distribution business. More people than that is what makes no sense. So if they now have sooo many more people it means that most of them do things not related to the Linux distribution business itself. Yes, the Linux still is at the core, but I don't count people supporting computing center operations as doing work for the Linux distribution - that is an entirely new layer well above it. Your accounting seems to be based on the idea that just because it's all centered around the Linux distribution it means you can call it all "Linux distribution business". I vehemently disagree, as I said, I consider that well above the level of merely selling Linux distributions. I saw how that business looked like from the inside, and what they do now does not remotely look like they do the same thing. Well, of course they still do, what I mean is the share of the overall activity of the company. The amount of people needed to build and maintain the Linux distribution has not changed significantly. They don't need more package maintainers or significantly more kernel hackers. The people they hired don't work on the Linux distribution but on things made on top of it, whether that's other software products or services.

johnvanommen 8y ago

I did OpenStack at HPE, watched as Suse acquired the software but not the employees, then landed in a job where I'm now doing Red Hat products. You're bumming me out lol