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DISCLAIMER: I work for Red Hat Consulting. Red Hat almost doesn't sell RHEL by itself anymore [0][1]. RHEL is lumped into OpenShift, Quay, OCS, OpenStack, RHV

by oso2k 7y ago

DISCLAIMER: I work for Red Hat Consulting. Red Hat almost doesn't sell RHEL by itself anymore [0][1]. RHEL is lumped into OpenShift, Quay, OCS, OpenStack, RHV and more often than not sold along side Ansible, Tower, JBoss, AMQ, Fuse, DecisionManager, etc. So, the revenue streams are being bundled together which makes it harder to tease out which product is pushing the Total Revenue line. Our integration with IBM might make that even harder to tell since they love to bundle everything into Cloud Paks [2]. You can review our 10Qs to understand our Revenue performance. What do you mean we lack differentiation? From who or what? Microsoft? AWS? Google? Canonical? SuSe? Apple? VMware? Pivotal? Docker? When we got acquired, we were the first $3B Open Source company with double-digit percentage growth [3]. And I think there is a brawl going on for big Corporate IT Cloud $$$. You might make the case that Red Hat was completely outgunned in a scenario where a $3B company wanted to compete against $100B companies (AWS, Google, MS, IBM). [0] https://www.redhat.com/en/store/linux-platforms https://www.redhat.com/en/store/linux-platforms [1] https://www.redhat.com/en/store/red-hat-middleware https://www.redhat.com/en/store/red-hat-middleware [2] https://www.ibm.com/cloud/paks/ https://www.ibm.com/cloud/paks/ [3] https://www.redhat.com/en/about/press-releases/red-hat-reports-first-quarter-results-fiscal-year-2020 https://www.redhat.com/en/about/press-releases/red-hat-repor...

zapita 7y ago
My bad! I meant to say "lack of diversification", as in: too much revenue coming from a single product. I did not mean to say there was a lack of differentiation - that is a much more subjective and controversial topic. What I'm talking about is much more straightforward: most of the money comes from RHEL. RHEL is not growing as fast as it used to. And other sources of revenue, like Openshift and Ansible, are not growing fast enough to fill the gap.
zapita 7y ago
> Red Hat almost doesn't sell RHEL by itself anymore [0][1]. RHEL is lumped into OpenShift, Quay, OCS, OpenStack, RHV and more often than not sold along side Ansible, Tower, JBoss, AMQ, Fuse, DecisionManager, etc. Right, but that only strengthens my point. Red Hat is bundling add-ons with RHEL in an effort to boost add-on sales. Without the bundling, those products would be doing considerably worse in the marketplace. > So, the revenue streams are being bundled together which makes it harder to tease out which product is pushing the Total Revenue line Again, this supports my point. Given the historical importance of RHEL revenue standalone, there is no good reason to bundle it with other streams, other than to hide something. What is being hidden, presumably, is exactly how much Red Hat still depends on good old RHEL renewal, as opposed to genuine demand for their new products.
- oso2k 7y ago
  I wouldn't put so much credence on historical revenue streams. As computing has changed, so have the revenue streams. There's fewer & fewer companies these days building and selling OSes. Linux has done wonders to standardize and commoditize the OS. I think the reality of computing today is that platforms, subscriptions & services are what companies want. It's a very Cloud Computing or Utilities-like conversation at certain levels of many companies. SaaS, PaaS, IaaS, CaaS, KaaS, Managed Services (your PaaS, IaaS, CaaS, KaaS or "X"aaS). We (Red Hat) have even developed (or are developing) Automation as a Service, AppDev as a Service, Digital Transformation as a Service, (Data) Integration as a Service managed services or service offerings. And obviously for Red Hat, it is all on a foundation of RHEL. But to focus on the OS is short sighted. No one believes an OS by itself is the solution anymore. So you can call them add-ons to RHEL, but things like OpenShift, Ansible, OpenStack, Satellite, etc. also have their add-ons in our catalog. So, I don't believe we're intentionally trying to hide revenue deltas in one product or another. I think that as computing has changed, customers are no longer asking if an OS can run these 1, 2, 3, dozen apps or network services on a single machine. Instead, they're asking for platforms or services that run their 10K or 100K apps/services in elastic, scalable and manageable ways. And we have platforms for those customers. And those platforms and service generally try to optimize for density and utilization. So that frees up resources for new apps and services.
  - zapita 7y ago
    I agree that the world is moving away from the OS-centric model, towards a cloud-centric model. I just don’t think Red Hat is nearly as strong in the new model as it was in the old. Red Hat was an uncontested leader and innovator in the OS market. In the cloud market... not the same story. The gap in revenue between RHEL and everything else illustrates that.
    - oso2k 7y ago
      I don't worry about that. We're backed by IBM Cloud now, there was that $34B bet placed last year, there's all sort of cross selling going on between IBM and Red Hat. I imagine we'll see more and more Red Hat software integrated in IBM Cloud services and offerings, and then, we'll have a Red Hat Enterprise Linux which will look a lot like Amazon Linux (which appears to be based on RHEL & CentOS).

by oso2k 7y ago

zapita 7y ago

My bad! I meant to say "lack of diversification", as in: too much revenue coming from a single product. I did not mean to say there was a lack of differentiation - that is a much more subjective and controversial topic. What I'm talking about is much more straightforward: most of the money comes from RHEL. RHEL is not growing as fast as it used to. And other sources of revenue, like Openshift and Ansible, are not growing fast enough to fill the gap.

zapita 7y ago

> Red Hat almost doesn't sell RHEL by itself anymore [0][1]. RHEL is lumped into OpenShift, Quay, OCS, OpenStack, RHV and more often than not sold along side Ansible, Tower, JBoss, AMQ, Fuse, DecisionManager, etc. Right, but that only strengthens my point. Red Hat is bundling add-ons with RHEL in an effort to boost add-on sales. Without the bundling, those products would be doing considerably worse in the marketplace. > So, the revenue streams are being bundled together which makes it harder to tease out which product is pushing the Total Revenue line Again, this supports my point. Given the historical importance of RHEL revenue standalone, there is no good reason to bundle it with other streams, other than to hide something. What is being hidden, presumably, is exactly how much Red Hat still depends on good old RHEL renewal, as opposed to genuine demand for their new products.

oso2k 7y ago
I wouldn't put so much credence on historical revenue streams. As computing has changed, so have the revenue streams. There's fewer & fewer companies these days building and selling OSes. Linux has done wonders to standardize and commoditize the OS. I think the reality of computing today is that platforms, subscriptions & services are what companies want. It's a very Cloud Computing or Utilities-like conversation at certain levels of many companies. SaaS, PaaS, IaaS, CaaS, KaaS, Managed Services (your PaaS, IaaS, CaaS, KaaS or "X"aaS). We (Red Hat) have even developed (or are developing) Automation as a Service, AppDev as a Service, Digital Transformation as a Service, (Data) Integration as a Service managed services or service offerings. And obviously for Red Hat, it is all on a foundation of RHEL. But to focus on the OS is short sighted. No one believes an OS by itself is the solution anymore. So you can call them add-ons to RHEL, but things like OpenShift, Ansible, OpenStack, Satellite, etc. also have their add-ons in our catalog. So, I don't believe we're intentionally trying to hide revenue deltas in one product or another. I think that as computing has changed, customers are no longer asking if an OS can run these 1, 2, 3, dozen apps or network services on a single machine. Instead, they're asking for platforms or services that run their 10K or 100K apps/services in elastic, scalable and manageable ways. And we have platforms for those customers. And those platforms and service generally try to optimize for density and utilization. So that frees up resources for new apps and services.
- zapita 7y ago
  I agree that the world is moving away from the OS-centric model, towards a cloud-centric model. I just don’t think Red Hat is nearly as strong in the new model as it was in the old. Red Hat was an uncontested leader and innovator in the OS market. In the cloud market... not the same story. The gap in revenue between RHEL and everything else illustrates that.
  - oso2k 7y ago
    I don't worry about that. We're backed by IBM Cloud now, there was that $34B bet placed last year, there's all sort of cross selling going on between IBM and Red Hat. I imagine we'll see more and more Red Hat software integrated in IBM Cloud services and offerings, and then, we'll have a Red Hat Enterprise Linux which will look a lot like Amazon Linux (which appears to be based on RHEL & CentOS).