18 ms·

The Red Hat model only worked for Red Hat

322 points by sherlockxu 4y ago

16bitvoid 4y ago
> Under Red Hat control, CentOS no longer modeled RHEL production code but was marketed as a beta—a preview of what was coming down the pipe. Eventually, the company sunsetted the project entirely, and as a result, new copycats emerged. I thought CentOS was downstream of RHEL. Doesn't this describe what CentOS Stream became?
- mroche 4y ago
  That very brief segment of the article pretty much collapsed a decade of time into two sentences, but yes it appears to be denoting the transition from CentOS [Linux] to CentOS Stream.
  - 16bitvoid 4y ago
    Right, but I assume the first sentence refers to CentOS and the second sentence of "sunsetting" referring to the end of CentOS and the start of CentOS Stream. After all, CentOS became a part of Red Hat back in 2014 and stopped in 2021. In other words, how was downstream CentOS considered a beta or "a preview of what was coming down the pipe"?
    - mroche 4y ago
      Probably a typo, but the CentOS Project came under the Red Hat umbrella in 2014. That segment of the article in particular is very poorly written, and seems to aim for sensationalism rather than accuracy. To answer your question directly: it wasn't.
    - spicyusername 4y ago
      They're probably referring to CentOS Stream being upstream of RHEL.
- jt2190 4y ago
  It was, but that changed as of RHEL 8. I suspect that AmazonLinux (also originally downstream of RHEL) caused Red Hat to reconsider this. I’m not sure why exactly. Perhaps Red Hat/IBM compete with Amazon in some space, or perhaps they felt that Amazon should release their patches.
  - pjmlp 4y ago
    OpenShift and IBM Cloud.
  - dralley 4y ago
    The CentOS Stream transition was a shift from the "throw it over the wall" model of open source like Android to a more collaborative approach. Example: As a user of (original) CentOS, you discover a bug. Where do you report that bug? The Red Hat Enterprise Linux bug tracker, because CentOS is just a clone and the community has no real ability to fix things. Then what? You wait until a Red Hat employee gets around to looking at it, and then wait until the next patch release which might be up to 6 months away. Now repeat with the new model. As a user of either CentOS Stream or one of the RHEL clones such as Alma Linux, Rocky Linux, Oracle Linux, etc. you discover a bug. Where do you report that bug? The CentOS Stream bug tracker, upstream for RHEL and thus also upstream for all RHEL clones. CentOS Stream is a community project, so the community (including yourself, and including maintainers for Alma / Rocky / Oracle Linux) can actively contribute to and drive the fix onwards to completion and test it afterwards, wheras before it would sit in internal nightly builds for a few months. Both the community and Red Hat benefit from aligning incentives that way. However, I understand why there was a lot of frustration about the way it was announced and implemented. It could have been handled better. disclosure: I work for Red Hat, but not on anything related to RHEL or CentOS Stream.
    - wkat4242 4y ago
      This is only a very small benefit to CentOS Stream. Most users would never report bugs but still suffered the loss of a LTS CentOS.
      - 4y ago
- glutee 4y ago
  That is correct my sir. And that's where this article lost me.
Ologn 4y ago
> The first company to successfully commercialize open source software at scale It depends on the definition of scale, or the company. Cygnus started in 1989 and was doing well, it merged with Red Hat around 1999. > The company generates way more value than it captures and has a low rake out of necessity—none of the software it creates is proprietary. There are expenses and revenues, and companies like Red Hat rake in revenues - which are more than expenses. So did MySQL and other companies. > It’s under constant threat of being disrupted or undermined by other open source providers. Back before cloud got big, I worked for companies that paid for HP/Dell service agreements and RHEL service agreements. If we were a smaller company we may have gone with CentOS or something, but we weren't. The thing not mentioned is not only that people can and do use things like Debian instead, but that RHEL gained from Linux and Debian as well. So the benefits flow both ways. > open core model...MongoDB...Elastic This is another model which can be done. Three years ago, Red Hat sold for more than twice what MongoDB's current market cap is. > The Red Hat model won’t be repeated. It's worked for a number of companies in the past, some of whom were purchased by Red Hat. I don't see any reasons why it won't happen again, although it's not every day that a Red Hat is founded. No reasons are given why this will never happen again - all the reasons given were things Red Hat, MySQL, Cygnus etc. had to deal with. > Support and services models don’t achieve hypergrowth Red Hat sold for $34 billion. If that is not enough hypergrowth for some VC or founder, then they will go with another model. > Support and services companies are uninvestable. Annual revenues are low and nonrecurring, and margins are tight. VCs are looking for 80%+ gross margins and hockey stick growth. I don't know how revenues are nonrecurring - I worked for a number of companies that paid service contracts for RHEL and other Red Hat products alongside our HP/Dell service contracts. Also - Intel, Netscape, Greylock and Benchmark did invest in Red Hat. Also, companies like Red Hat and MySQL did have hockey stick-like growth. For a company following the Red Hat model that needs to raise money from VCs, these thoughts might be applicable. But for companies following the Red Hat model that are not losing money, they don't really have to worry about what VCs think of this.
- omgwtfbyobbq 4y ago
  From my limited existence, one of my older employers paid Red Hat a lot of money for a fairly limited/short engagement with 1-2 of their software engineers and 1 of their solutions engineers, and then paid tens of thousands per year for I think 2 production support contracts for their software for years after. At the same time, I could see how they could have gotten pinched recently if they were unwilling to pay more to retain talent and are now getting squeezed from the other side by companies moving away from their products to reduce costs.
singpolyma3 4y ago
"open core is the best model" says company dedicated to pursuing open core... There are dozens of "open source business models" and as this article shows the "red hat model" isn't even one thing.
- prepend 4y ago
  I remember back when Microsoft used to be anti open source too. They would release super straw man type articles about how proprietary software was actually cheaper with lower ToS and other poppycock. Weird to see a startup making such simplistic, wrong statements to promote their business rather than to protect an entrenched business.
fatneckbeard 4y ago
I find it hilarious they are saying VCs wont invest in redhat style business because it's growth is not "hyper". These same VCs who are so fundamentally incompetent at the basics of capitalism, like risk management 101 of interest rates, that they had to get bailed out by the government, by the FDIC randomly deciding to rewrite the entire rule book that the rest of us normies have to live by.
- wmf 4y ago
  I don't see it that way. They were bribed with venture debt and mortgages to ignore the tail risk of uninsured deposits. Probably many VCs would have made the same decision in retrospect.
- mgfist 4y ago
  SVB was a bank, not a VC.
  - dboreham 4y ago
    Its customers were vcs.
- scaramanga 3y ago
  It is no secret that VC's are not interested in productive enterprises which produce a reliable and fair return on investment through revenue-generating activities. As you point out, They are obviously interested in concentration of vast amounts of wealth, which requires a completely different set of tactics. Cornering markets and establishing monopolies, regulatory capture, pump and dumps and other forms of grift and large-scale antisocial behaviour. It should be completely obvious to any onlooker that they have no interest in innovation or technology :)
rdtsc 4y ago
> If Red Hat tried to force people to pay too much, everyone would switch to the freely distributed versions (AlmaLinux, Rocky Linux, etc.). Not if they need a long term supported and certified OS with various compliance checkmarks associated with it.
- wmf 4y ago
  Yeah, but the question is whether such requirements apply to software beyond operating systems.
  - rdtsc 4y ago
    They might but unless they also come on a supported OS with all the certifications checkboxes checked it won’t even get its foot in the door. It helps if that other software is built on as much of the already supported and maintained set of base libraries.
- candiddevmike 4y ago
  You can have CIS, FIPS, and a whole host of other compliance without Red Hat, arguably just as easily. The reality is containers and container-first OSs are killing RHEL, you no longer need a breadth of OS packages or a fully capable OS. Just docker or podman. The only place RHEL has a stranglehold is with COTS apps, but those are all moving to containers too. I can't think of any widely used container that uses RHEL/CentOS or Fedora for the base image, that was a huge miss on RH's part.
  - wmf 4y ago
    That's why they created OpenShift which is arguably worth more than RHEL.
    - candiddevmike 4y ago
      Eh, OpenShift is too opinionated to be valuable for the companies that can afford it, and way too expensive for those that might benefit from it vs a cloud based PaaS. OpenShift's biggest problem has always been that it continues to diverge just enough from vanilla k8s to require "OpenShift specific" shit for everything. I don't see OpenShift getting the same COTS lift as RHEL, so in my mind it's still going to be a net loss for RH long term as that revenue leaves RHEL and doesn't go to OCP.
tssva 4y ago
Red Hat early on invested in understanding the needs of the different industry verticals they were trying to sell into and made sure their products could meet things such as compliance and audit requirements of differing sectors. They developed guides on how to deploy their products in a manner which met those requirements and their professional services engineers understood not just Red Hat products but the specific needs of differing sectors. This is how I saw them winning enterprise customers over larger established players in the early 2000s. Even today most opensource businesses don't do this to the extent Red Hat was in the early 2000s.
- jasoneckert 4y ago
  I concur with your points 100%. Moreover, I remember Red Hat sales reps back in the 2000s to be incredibly technical and knowledgable compared to every other vendor's sales reps. Every time I had a specific question regarding technical implementation or even compliance laws in my region, the sales rep knew the answer or forwarded me immediately to someone who did. They were very organized.
- gabereiser 4y ago
  This is correct. They still do this. They are the only ones. They go beyond just "hey, I know of a database that could handle that size" to "why are you storing this here? this is PII, this is analytical data, this is business data, here's a proposal for doing this with open source at scale". It's not just "buy our product". They go above and beyond the needs of the product to the needs of the customer, like you said.
  - Spooky23 4y ago
    Other “open source” companies are always focused on modern startup stuff. Too much fake it till you make it. They have a unique value proposition in that they are an OS, so they are everywhere by default. It makes sense to have a .gov, banking, healthcare, etc teams who grok whatever the issues are in those verticals.
  - hyperthesis 4y ago
    So they're a pure consultancy firm, competing with those infatuated by the write-once-sell-many economics of software.
btown 4y ago
Red Hat worked because it was a time (the height of the dot-com bubble) when open source operating systems were something of a Wild West - rapidly becoming an industry standard, but not well understood by existing businesses. Red Hat provided guidance for that transition. Confluent was arguably also able to do this for a similar reason - at the time they launched, the Kafka model was becoming vital, but was also novel and difficult to manage in production, and its enterprise services and support were critical for adoption. (They do have a managed cloud now, but their enterprise services were 73% of their revenue in 2021 and 61% in 2022: https://investors.confluent.io/node/8466/html https://investors.confluent.io/node/8466/html ). But it's hard to run what is essentially a professional services firm and popularize an open-source product at the same time... unless your open source product is already rapidly becoming paradigm-defining, and you're the people with the unique know-how to position yourself as the saviors for that space.
- EdwardDiego 4y ago
  Confluent also moved early on the Confluent Community Licence for Kafka Connect connectors they developed to prevent other service providers being able to provide the service that Confluent did.
- andrewem 4y ago
  Side note on Confluent’s products. Thanks for that link - the “Disaggregation of Revenue” table where the 73% and 61% numbers came from shows that Confluent Cloud revenue increased from $94M in 2021 to $211M in 2022, which was more than Confluent Platform’s revenue growth. If those growth rates continue then Confluent Cloud will very soon be the majority of their revenue.
  - toyg 4y ago
    I always take those numbers with a big pinch of salt. There is a wave, in the management world, that wants every business to be "Cloud” (i.e. SaaS), because of the (largely correct) assumption that it enables better rent-seeking and long-term lock-in. So every vendor is officially busy "pivoting to a subscription model" and wants to show growth in that area to investors, so they file everything they can under "cloud" divisions.
wejick 4y ago
Expected to see canonical model get mentioned in the article, combination of proprietary online services with opensource products. Well we know all of debate around it and the peculiarities of canonical, but I feel like it worths mentioning.
- jacooper 4y ago
  Not that they are practically successful at that either.
- tsimionescu 4y ago
  Is Canonical making money now? Last I heard (though that was a good few years ago) they were still net negative after many years of making Ubuntu successful.
breck 4y ago
I think it would be a great benefit to our country if governments started phasing out the purchase of any proprietary software. If you want to make software for the government, it must be public domain. In the long run we'd all have lower taxes, more efficient government, and better software for all to use. The downside would be some people in the 1% would no longer earn billions in fees from the rest of us for "licensing" software laden with technical debt to the government.
- TRiG_Ireland 4y ago
  The Irish government released its Covid phone apps as Free Software.
- RobotToaster 4y ago
  The UK government has a pretty big github account https://github.com/alphagov https://github.com/alphagov
- shagie 4y ago
  Proprietary often has a lower total cost of ownership than the comparable loss of productivity and loss of support compared to open source software. Do you have a good example of a company that provides support comparable to Microsoft's www.office.com (word, excel, powerpoint, outlook, teams, and one note). Note that this is a web instance which means that the cost of installing and managing software updates on various computers is reduced. The lower taxes is not guaranteed at all when looking at the total cost of ownership. With open source software, this often means increasing the staffing (because there's no corresponding org that will do the support with the necessary SLA) which also means that there isn't necessarily more efficient government. The "better software for all to use" - switching to LibreOffice (or one of its forks) doesn't mean that the open source developers are going to prioritize the issues from Smith County, KS when there's an issue that impacts them. To go down this path of "lets have government use open source" it is first necessary to get the open source developers to want to make their product competitive for government use compared to the proprietary ones that are out there and for companies to step up and provide similar SLAs that Microsoft and others offer. That is something that can happen now, but isn't because there isn't enough interest from the FOSS community to do that for that sector. Trying to push the public sector to do it would be painful, expensive, and inefficient and not result in any better software.
throwaway892238 4y ago
Reasons why people pay for Red Hat: 1. Customer support 2. Certifications 3. Vendor support I don't know another distribution of Linux that provides all these things to the extent Red Hat does. You don't use Red Hat because you want to, you use it because it's the only choice. Any business could do exactly the same thing, and do it better than Red Hat. But there's really not much reason for a customer to move away from Red Hat if they're already on it, and it would take you a hell of a long time and a dumptruck full of capital to match them on the above. Open Core is not a business model, just like Open Source isn't a business model. A business model is promising to fix a customer's problem, certify their software, and get vendors to support them. That alone will get you a yearly renewing contract for a couple million that you then upsell over time.
- dfc 4y ago
  When I pay Redhat for customer support how is it different than the vendor support I pay them for?
  - Spooky23 4y ago
    When you run enterprise product X on Red Hat version Y, that vendor will do less fingerpointing. They may even work with Red Hat in the backend to deal with bugs, etc. If you go put that on Debian or whatever, they’ll make you reproduce on RHEL. This becomes a big deal when you have RHEL, VMWare, and other vendors in the mix. If you ignore the certification, the app vendor or VMWare will just shrug at you.
- Dalewyn 4y ago
  >A business model is promising to fix a customer's problem, certify their software, and get vendors to support them. This can also be described as assuming liability. Fact of the matter is people don't want to assume liability themselves. If they can pay to get someone else to assume that liability (which Red Hat is happy to do) they will. The rest of the FOSS ecosystem on the other hand is all about assuming liability yourself. No warranties expressed nor implied, no support, no nothing. For a business that is simply not palatable. This is also why businesses happily pay tons of monies to Microsoft, Adobe, IBM, etc. for licenses and support. They assume liability, liability the businesses don't want to assume.
passterby 4y ago
[dead]
PeterZaitsev 4y ago
If you are looking for "Investable Hyppergrowth" Open Core is a great choice. If you want to maximize the value project proviedes to the universe sticking to Open Source is better choice
nimbius 4y ago
modern redhat --and this cannot be stressed enough-- is nothing like old redhat despite IBM's fervent insistance after the acquisition they would remain hands off. The hat killed Centos because some IBM midlevel manager needed to make quota for a bonus, and they didnt stop to realize just how unsuccessful this tactic was for Oracle/MySQL. moderen redhat is carved into about 40 seperate repositories and channels for packages designed to fleece you right down to the last RPM. need Ansible? sure it comes with redhat 9. need posix acl support from galaxy? that's another repo you didnt pay for. same goes for about a hundred other packages. redhat might have had great tech support in the past, but put a ticket in now and you're in IBM levels of "prove it" hell with SOSReport zips and zoom screenshares until your entry level support guy gives up the ghost and calls a developer, who tells you the bug cant/wont be fixed because libraries are hard or a rebase is impossible or any other number of boilerplate excuses why this ancient 4.x kernel based distro cant just source its solutions from fedora like they said they do and the flagships? forget it. Yeah Quay exists but try to implement it and youll find cool stuff like an administrator account defined in configuration but not created. once created in the admin panel youll have to go back and disable new user creation so you can control user creation at all, and the whole thing just feels rickety and poorly designed from the get-go. none of this is mentioned in the docs overtly, but is buried in Redhats bloated docs pages. just buy a quay hosted whatever from the hat instead. Openshift is equally appalling as its a massive ecosystem Redhats done virtually everything to control and nothing to distribute or competently document. its painfully obvious IBM wants you to hire a consultant to build and deploy it...There is an open-source offering, but it cant be easily rolled into an airgap installation and it suffers the same level of byzantine and poorly written documentation as Quay. K3S/RKE2 easily beat it for nearly every use case. Then theres the docker fiasco which unsurprisingly neither of these juggernauts wanted to deal with the others bullshit so now dockers broken in all but the most monied instances of IBM hardware. redhat became so absolutely resolute about podman being "everything you can do i can do too" that it has a fucking compose option to translate docker compose into podman because people like compose but rewriting your appstack to pods when you dont want to be arsed with k8s is sort of a non-starter.
- dralley 4y ago
  > The hat killed Centos because some IBM midlevel manager needed to make quota for a bonus, and they didnt stop to realize just how unsuccessful this tactic was for Oracle/MySQL. I cannot stress enough how untrue this is. See my comment https://news.ycombinator.com/item?id=35586311 https://news.ycombinator.com/item?id=35586311 RHEL clones were always going to exist, this is and was obvious, and there are more of them now than ever. That's not the point. The point is that now there is a way for RHEL clones, including ones from competitors like Oracle, have some way of contributing back to RHEL, whereas beforehand if you were a CentOS user your only possible course of action was to file a bug in the RHEL bug tracker and wait for a Red Hat employee to prioritize it. The business benefit is also a technical benefit - the ability to fix bugs and add features is no longer strictly limited by the amount of engineering capacity Red Hat can contribute. Companies like Facebook use CentOS Stream at scale internally and make contributions that ultimately end up in RHEL, users and vendors have a target they can integrate against early without needing gated betas, etc.
pankajdoharey 4y ago
The model is quite simple and it will work for others aswell, as long as onyone provide the software or core for free and for customized solution they will come to you.
huslage 4y ago
I was at Red Hat very early on. Red Hat has been remarkably consistent throughout its journey once it graduated from selling boxes of software at book stores (which was a necessary step). Red Hat only astook venture money once it was ready to go public and never before. The philosophy of Red Hat was to "make the pie bigger" and still largely is, therefore it supports open source first before anything else. This works because it provides product-market fit at scale and by nature. The thought that "all" Red Hat sells is software support, certifications, and subscriptions to updates is so short sighted and misses the point. Red Hat created an industry and all of the successful enterprise Linux distros have followed its model to some extent or another (Canonical, SUSE, etc). You don't need "open core" (which is a misnomer if there ever was one) if you continue down a path that creates and maintains communities of software authors out there in the world that will constantly feed value back into the ecosystem. A virtuous cycle of community maintained software alongside a thriving and growing business is still achievable, no one seems to have the guts to do it. (edited for typo)
- commandersaki 4y ago
  I find Redhat jumped the shark when it started selling its distribution with different licensing options that let you use different number of CPU cores.
  - nine_k 4y ago
    I kept thinking that Red Hat's Linux offerings are properly FOSS, and the stuff you buy is support contracts. What are some per-CPU offers from them? (Because that's what I'd expect from Oracle, and hardly from RH.)
    - snuxoll 4y ago
      Per-core licensing is more or less limited to JBoss stuff and the likes. Stuff like RHEL, OpenShift Enterprise, etc. is typically licensed by socket-pair.
  - 1letterunixname 4y ago
hash872 4y ago
>Getting contracts for development work with large customers can be difficult since most organizations already have preferred vendors for software development. Developing features under a support model gives you no entitlement to the technology. And, if you’re good at what you do, you’ll eventually put yourself out of a job since customers can use it without help But there are a large number of outsourced software development companies, some of them publicly traded- Cognizant/Infosys/Wipro types, plus Accenture, plus the new generation of Eastern European ones like EPAM and Grid Dynamics. Government-y ones like CGI. Oldschool companies offering consultancies like EY/Deloitte, etc. Hovering in the background is Toptal, which is technically different but I would imagine the bulk of their revenue comes from enterprise outsourced dev contracts. All of these companies are making this business model work somehow? And there are lots of them too. So it can't be that bad of a way to make money (yes I understand that these are not VC-investable businesses)
weare138 4y ago
The biggest reason why we don’t see support and services companies achieving hyper-growth is that they are uninvestable. Annual revenues are low and nonrecurring, and margins are tight. VCs are looking for 80%+ gross margins and hockey stick growth. In other words, Red Hat's model doesn't work for Wall St and VCs looking to make quick easy money riding out the next tech 'unicorn'. Red Hat has survived and thrived for 30 years now, while most modern VC backed tech companies are lucky to make it past 3. The infiltration of Silicon Valley VC vultures was one of the worst things to happen to the tech industry and why we rarely see sustainable startups like Red Hat anymore.
- KennyFromIT 4y ago
  I don't think this can be overstated enough. The incentives for vc-backed companies these days don't align with this model, hence the reason it's not more widely in use.
  - scaramanga 3y ago
    And a very good argument for taxing that money out of their hands and investing it into productive enterprises that spur actual innovation and gainful employment.
- JadedEngineer 4y ago
  It's almost like building a company slowly, within your means, and focusing on improving the product, is the wrong way to do it these days. Better go with some BS that's flashy, make big claims and promises, and try to get some of that sweet VC money!
firatsarlar 4y ago
Is Red Hat an open source enterprise entity ? assume -> yes Did they share -> yes Did they serve o.s. community -> yes No, they worked for me too - not an enterprise -
penciltwirler 4y ago
Hold on... aren't there a bunch of incredily successful "open source" / "source available" companies? Databricks, Cockroach Labs, Hashicorp, MongoDB, Elasticsearch etc?
- fourthark 4y ago
  Yes this article is promoting the "open core" model those companies follow, as opposed to the "pure" open source model Red Hat follows.
  - pjmlp 4y ago
    Which is basically PD and Shareware for post-2000 folks.
- bonzini 4y ago
  And how many of them are now trying to switch to fauxpen source licenses like MongoDB's SSPL?
wkat4242 4y ago
The RedHat model doesn't even work for RedHat anymore. They killed CentOS for a reason. Too few companies were paying for it.
deleted 4y ago
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BenoitP 4y ago
You know what works just like the Red Hat model, but yields way better returns? The AWS model. Just take all these tech-tested market-tested open source projects, slap on a new name and bill them by the hour.
- Jgrubb 4y ago
  I'd be curious to know the revenue breakdown of all their various products as a percentage of the total. I wonder if all those products you reference bring in much $$ compared to the bread and butter ones that they started off with - EC2, S3, etc
kaba0 4y ago
One might argue that Oracle also made this model work. Not sure about their revenue between different divisions, but they finished open-sourcing even the last proprietary part of their JDK, making OpenJDK the reference implementation, plus they finance 90+% of all its commits. They make some revenue from selling OracleJDK licenses (and even most of those are free if you stay on the latest version) which includes support. Many of their customers are on older Java versions though, for example their Java 8 support is valid for something like 2030, so mostly government, big enterprises. (For some reason though, there is just endless bullshit around Java, even though the exact same model/license is true for the Linux kernel)
- pjmlp 4y ago
  The funny thing about Oracle haters is how they ignore that Oracle and IBM stand by Java since the early days, they collaborated with Sun on the Network Computer project, were one of the first SQL vendors to include the JRE on the database engine, provide a GUI based on Swing, JSF framework, JVM implementation, IDE, and so on. They also ignore the fact that Sun also charged money for support, JDK was only available as free beer with source on request, the whole Apache drama with the TCK, and access to legacy versions required a Sun developer account with license. Or that they were the ones introducing the separation of having UNIX for users, and an additional license for an UNIX SDK, which is what made people rush to improve GCC, until then mostly ignored project.
  - Kwpolska 4y ago
    I think that most Oracle haters hate them for their obscenely expensive and often idiosyncratic database product, as well as their legal division being larger than their engineering division. And speaking of databases, the idea of running custom Java code inside the database seems like an abuse of the database. How many people actually use this feature, and how many of them like it (as opposed to having made a bad technical decision 20 years ago)?
    - pjmlp 4y ago
      Plenty, this is no different from running C and Perl, which Oracle did before, what PostgreSQL allows for (which Rust stable support being cheered over here last week), or running .NET on SQL Server. When performance matters, stored procedures are the way to go, not wasting network traffic and CPU cycles on the client, As it so happens, these additional runtimes are great and safer way to extend PL/SQL, pg/SQL, T-SQL,... than writing C extensions.
tannhaeuser 4y ago
RedHat is the employer of many Linux developers, including maintainers for GNU software etc., with SuSE and Canonical distant followers (at least it used to be like that). So I guess that makes them both a very significant contributor as well as deserved receiver of financial resources towards F/OSS. OTOH, apart from adaptions to ever-changing hardware, you could say that the times where Linux innovations are actually serving end users is long, long behind us, and anything RH pushed, such as systemd, gnome, and in particular podman (to take away from Docker ie what RH sees as their market, and theirs alone) etc. is basically zero sum software created out of a self-serving interest of selling support contracts by definition. That Linux isn't pro consumer is also evident by it being used for clouds and for a privacy-invading mobile O/S. Linux was nice and gave a direction to a developer community as long as it was chasing commercial Unix/POSIX with strong precedents and blueprints what to implement. Now it's just an IBM division.
- pjmlp 4y ago
  And in the process, a cheaper alternative to Aix. People that weren't there in the begining don't get it that Linux only really took off around the UNIX offerings of the early 2000's, when Oracle, Compaq, Intel, IBM money started be pumped into Linux in some form. The thing with UNIX/POSIX clones, is that there is hardly any inovation beyond adding new drivers and kernel features, as POSIX doesn't have anything else to offer.
Twisell 4y ago
I quite disagree with two ideas in this article: 1. For me until proven otherwise, RedHat have an OpenCore model, the CentOS shift is too recent to be meaningful. My company literally panicked about their CentOS servers because they didn't want a rolling distro and so decided to switch to something else free for low risk VM (worse I'm afraid) and pay RHEL support for critical applications. 2.There are a shitload of successful support company for real OpenSource product, the author just choose to ignore them. Maybe because they are mostly smaller and "uninvestable". Just look a the support advertised options for PostgreSQL in North-America only... https://www.postgresql.org/support/professional_support/northamerica/ https://www.postgresql.org/support/professional_support/nort...
- asddubs 4y ago
  why didn't they just switch to rockylinux?
  - Twisell 4y ago
    They switched to Oracle Linux... and for the love of humankind don't ask me why... (At least they had the sense to switch to REHL for critical servers) Now on the app side we are left with some vendors that don't support installs on OracleLinux (because who would switch to that... again don't ask me why).
- deleted 4y ago
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rwmj 4y ago
(Note: I work for Red Hat) I'm constantly amazed that people still don't understand why Red Hat makes money, and this article won't enlighten you as it doesn't understand it as well as being full of other incidental mistakes (like their description of CentOS is way off the mark). Red Hat takes Linux and certifies it against all kinds of government, safety, privacy etc standardards, such as PCI and FIPS and numerous local ones. As a result if you are a government or many large companies you simply cannot download Linux and YOLO it. You are legally required to use the certified software so you take the path of least resistance and buy RHEL. That's it. It's why Red Hat makes piles of money, and Canonical or your SaaS does not. Understand what your big customers are required to have and provide it to them, even though it's boring and expensive to do.
- AniseAbyss 4y ago
  [dead]
- gbraad 4y ago
  And note; it is written by Sid Sijbrandij, who is the CEO of GitLab.
  - rwmj 4y ago
    Thanks, I didn't make that connection. It explains a lot about why Gitlab are losing money hand over fist at the moment.
    - gbraad 4y ago
      The name is very obvious to me; quite a 'unique' Dutch name, and he used to be the classmate of a colleague of mine. While he doesn't mention the name in the article, the Open Core references align with their own offering.
- hahnchen 4y ago
  Does redhat have customors who don't need government compliance? If so, why do they use red hat?
scaramanga 3y ago
The article describes, almost perfectly, the condition of being a productive enterprise within a capitalist free-market in which you are subject to competition. What is striking is how, for observers within the tech-industry, this is perceived as a peculiar and inexplicable state of affairs, almost as if an alien creature has materialized through a portal into an alternate universe.

322 points by sherlockxu 4y ago

> Under Red Hat control, CentOS no longer modeled RHEL production code but was marketed as a beta—a preview of what was coming down the pipe. Eventually, the company sunsetted the project entirely, and as a result, new copycats emerged. I thought CentOS was downstream of RHEL. Doesn't this describe what CentOS Stream became?

mroche 4y ago
That very brief segment of the article pretty much collapsed a decade of time into two sentences, but yes it appears to be denoting the transition from CentOS [Linux] to CentOS Stream.
- 16bitvoid 4y ago
  Right, but I assume the first sentence refers to CentOS and the second sentence of "sunsetting" referring to the end of CentOS and the start of CentOS Stream. After all, CentOS became a part of Red Hat back in 2014 and stopped in 2021. In other words, how was downstream CentOS considered a beta or "a preview of what was coming down the pipe"?
  - mroche 4y ago
    Probably a typo, but the CentOS Project came under the Red Hat umbrella in 2014. That segment of the article in particular is very poorly written, and seems to aim for sensationalism rather than accuracy. To answer your question directly: it wasn't.
  - spicyusername 4y ago
    They're probably referring to CentOS Stream being upstream of RHEL.
jt2190 4y ago
It was, but that changed as of RHEL 8. I suspect that AmazonLinux (also originally downstream of RHEL) caused Red Hat to reconsider this. I’m not sure why exactly. Perhaps Red Hat/IBM compete with Amazon in some space, or perhaps they felt that Amazon should release their patches.
- pjmlp 4y ago
  OpenShift and IBM Cloud.
- dralley 4y ago
  The CentOS Stream transition was a shift from the "throw it over the wall" model of open source like Android to a more collaborative approach. Example: As a user of (original) CentOS, you discover a bug. Where do you report that bug? The Red Hat Enterprise Linux bug tracker, because CentOS is just a clone and the community has no real ability to fix things. Then what? You wait until a Red Hat employee gets around to looking at it, and then wait until the next patch release which might be up to 6 months away. Now repeat with the new model. As a user of either CentOS Stream or one of the RHEL clones such as Alma Linux, Rocky Linux, Oracle Linux, etc. you discover a bug. Where do you report that bug? The CentOS Stream bug tracker, upstream for RHEL and thus also upstream for all RHEL clones. CentOS Stream is a community project, so the community (including yourself, and including maintainers for Alma / Rocky / Oracle Linux) can actively contribute to and drive the fix onwards to completion and test it afterwards, wheras before it would sit in internal nightly builds for a few months. Both the community and Red Hat benefit from aligning incentives that way. However, I understand why there was a lot of frustration about the way it was announced and implemented. It could have been handled better. disclosure: I work for Red Hat, but not on anything related to RHEL or CentOS Stream.
  - wkat4242 4y ago
    This is only a very small benefit to CentOS Stream. Most users would never report bugs but still suffered the loss of a LTS CentOS.
    - 4y ago
glutee 4y ago
That is correct my sir. And that's where this article lost me.

Ologn 4y ago

> The first company to successfully commercialize open source software at scale It depends on the definition of scale, or the company. Cygnus started in 1989 and was doing well, it merged with Red Hat around 1999. > The company generates way more value than it captures and has a low rake out of necessity—none of the software it creates is proprietary. There are expenses and revenues, and companies like Red Hat rake in revenues - which are more than expenses. So did MySQL and other companies. > It’s under constant threat of being disrupted or undermined by other open source providers. Back before cloud got big, I worked for companies that paid for HP/Dell service agreements and RHEL service agreements. If we were a smaller company we may have gone with CentOS or something, but we weren't. The thing not mentioned is not only that people can and do use things like Debian instead, but that RHEL gained from Linux and Debian as well. So the benefits flow both ways. > open core model...MongoDB...Elastic This is another model which can be done. Three years ago, Red Hat sold for more than twice what MongoDB's current market cap is. > The Red Hat model won’t be repeated. It's worked for a number of companies in the past, some of whom were purchased by Red Hat. I don't see any reasons why it won't happen again, although it's not every day that a Red Hat is founded. No reasons are given why this will never happen again - all the reasons given were things Red Hat, MySQL, Cygnus etc. had to deal with. > Support and services models don’t achieve hypergrowth Red Hat sold for $34 billion. If that is not enough hypergrowth for some VC or founder, then they will go with another model. > Support and services companies are uninvestable. Annual revenues are low and nonrecurring, and margins are tight. VCs are looking for 80%+ gross margins and hockey stick growth. I don't know how revenues are nonrecurring - I worked for a number of companies that paid service contracts for RHEL and other Red Hat products alongside our HP/Dell service contracts. Also - Intel, Netscape, Greylock and Benchmark did invest in Red Hat. Also, companies like Red Hat and MySQL did have hockey stick-like growth. For a company following the Red Hat model that needs to raise money from VCs, these thoughts might be applicable. But for companies following the Red Hat model that are not losing money, they don't really have to worry about what VCs think of this.

omgwtfbyobbq 4y ago
From my limited existence, one of my older employers paid Red Hat a lot of money for a fairly limited/short engagement with 1-2 of their software engineers and 1 of their solutions engineers, and then paid tens of thousands per year for I think 2 production support contracts for their software for years after. At the same time, I could see how they could have gotten pinched recently if they were unwilling to pay more to retain talent and are now getting squeezed from the other side by companies moving away from their products to reduce costs.

singpolyma3 4y ago

"open core is the best model" says company dedicated to pursuing open core... There are dozens of "open source business models" and as this article shows the "red hat model" isn't even one thing.

prepend 4y ago
I remember back when Microsoft used to be anti open source too. They would release super straw man type articles about how proprietary software was actually cheaper with lower ToS and other poppycock. Weird to see a startup making such simplistic, wrong statements to promote their business rather than to protect an entrenched business.

fatneckbeard 4y ago

I find it hilarious they are saying VCs wont invest in redhat style business because it's growth is not "hyper". These same VCs who are so fundamentally incompetent at the basics of capitalism, like risk management 101 of interest rates, that they had to get bailed out by the government, by the FDIC randomly deciding to rewrite the entire rule book that the rest of us normies have to live by.

wmf 4y ago
I don't see it that way. They were bribed with venture debt and mortgages to ignore the tail risk of uninsured deposits. Probably many VCs would have made the same decision in retrospect.
mgfist 4y ago
SVB was a bank, not a VC.
- dboreham 4y ago
  Its customers were vcs.
scaramanga 3y ago
It is no secret that VC's are not interested in productive enterprises which produce a reliable and fair return on investment through revenue-generating activities. As you point out, They are obviously interested in concentration of vast amounts of wealth, which requires a completely different set of tactics. Cornering markets and establishing monopolies, regulatory capture, pump and dumps and other forms of grift and large-scale antisocial behaviour. It should be completely obvious to any onlooker that they have no interest in innovation or technology :)

rdtsc 4y ago

> If Red Hat tried to force people to pay too much, everyone would switch to the freely distributed versions (AlmaLinux, Rocky Linux, etc.). Not if they need a long term supported and certified OS with various compliance checkmarks associated with it.

wmf 4y ago
Yeah, but the question is whether such requirements apply to software beyond operating systems.
- rdtsc 4y ago
  They might but unless they also come on a supported OS with all the certifications checkboxes checked it won’t even get its foot in the door. It helps if that other software is built on as much of the already supported and maintained set of base libraries.
candiddevmike 4y ago
You can have CIS, FIPS, and a whole host of other compliance without Red Hat, arguably just as easily. The reality is containers and container-first OSs are killing RHEL, you no longer need a breadth of OS packages or a fully capable OS. Just docker or podman. The only place RHEL has a stranglehold is with COTS apps, but those are all moving to containers too. I can't think of any widely used container that uses RHEL/CentOS or Fedora for the base image, that was a huge miss on RH's part.
- wmf 4y ago
  That's why they created OpenShift which is arguably worth more than RHEL.
  - candiddevmike 4y ago
    Eh, OpenShift is too opinionated to be valuable for the companies that can afford it, and way too expensive for those that might benefit from it vs a cloud based PaaS. OpenShift's biggest problem has always been that it continues to diverge just enough from vanilla k8s to require "OpenShift specific" shit for everything. I don't see OpenShift getting the same COTS lift as RHEL, so in my mind it's still going to be a net loss for RH long term as that revenue leaves RHEL and doesn't go to OCP.

tssva 4y ago

Red Hat early on invested in understanding the needs of the different industry verticals they were trying to sell into and made sure their products could meet things such as compliance and audit requirements of differing sectors. They developed guides on how to deploy their products in a manner which met those requirements and their professional services engineers understood not just Red Hat products but the specific needs of differing sectors. This is how I saw them winning enterprise customers over larger established players in the early 2000s. Even today most opensource businesses don't do this to the extent Red Hat was in the early 2000s.

jasoneckert 4y ago
I concur with your points 100%. Moreover, I remember Red Hat sales reps back in the 2000s to be incredibly technical and knowledgable compared to every other vendor's sales reps. Every time I had a specific question regarding technical implementation or even compliance laws in my region, the sales rep knew the answer or forwarded me immediately to someone who did. They were very organized.
gabereiser 4y ago
This is correct. They still do this. They are the only ones. They go beyond just "hey, I know of a database that could handle that size" to "why are you storing this here? this is PII, this is analytical data, this is business data, here's a proposal for doing this with open source at scale". It's not just "buy our product". They go above and beyond the needs of the product to the needs of the customer, like you said.
- Spooky23 4y ago
  Other “open source” companies are always focused on modern startup stuff. Too much fake it till you make it. They have a unique value proposition in that they are an OS, so they are everywhere by default. It makes sense to have a .gov, banking, healthcare, etc teams who grok whatever the issues are in those verticals.
- hyperthesis 4y ago
  So they're a pure consultancy firm, competing with those infatuated by the write-once-sell-many economics of software.

btown 4y ago

Red Hat worked because it was a time (the height of the dot-com bubble) when open source operating systems were something of a Wild West - rapidly becoming an industry standard, but not well understood by existing businesses. Red Hat provided guidance for that transition. Confluent was arguably also able to do this for a similar reason - at the time they launched, the Kafka model was becoming vital, but was also novel and difficult to manage in production, and its enterprise services and support were critical for adoption. (They do have a managed cloud now, but their enterprise services were 73% of their revenue in 2021 and 61% in 2022: https://investors.confluent.io/node/8466/html https://investors.confluent.io/node/8466/html ). But it's hard to run what is essentially a professional services firm and popularize an open-source product at the same time... unless your open source product is already rapidly becoming paradigm-defining, and you're the people with the unique know-how to position yourself as the saviors for that space.

EdwardDiego 4y ago
Confluent also moved early on the Confluent Community Licence for Kafka Connect connectors they developed to prevent other service providers being able to provide the service that Confluent did.
andrewem 4y ago
Side note on Confluent’s products. Thanks for that link - the “Disaggregation of Revenue” table where the 73% and 61% numbers came from shows that Confluent Cloud revenue increased from $94M in 2021 to $211M in 2022, which was more than Confluent Platform’s revenue growth. If those growth rates continue then Confluent Cloud will very soon be the majority of their revenue.
- toyg 4y ago
  I always take those numbers with a big pinch of salt. There is a wave, in the management world, that wants every business to be "Cloud” (i.e. SaaS), because of the (largely correct) assumption that it enables better rent-seeking and long-term lock-in. So every vendor is officially busy "pivoting to a subscription model" and wants to show growth in that area to investors, so they file everything they can under "cloud" divisions.

wejick 4y ago

Expected to see canonical model get mentioned in the article, combination of proprietary online services with opensource products. Well we know all of debate around it and the peculiarities of canonical, but I feel like it worths mentioning.

jacooper 4y ago
Not that they are practically successful at that either.
tsimionescu 4y ago
Is Canonical making money now? Last I heard (though that was a good few years ago) they were still net negative after many years of making Ubuntu successful.

breck 4y ago

I think it would be a great benefit to our country if governments started phasing out the purchase of any proprietary software. If you want to make software for the government, it must be public domain. In the long run we'd all have lower taxes, more efficient government, and better software for all to use. The downside would be some people in the 1% would no longer earn billions in fees from the rest of us for "licensing" software laden with technical debt to the government.

TRiG_Ireland 4y ago
The Irish government released its Covid phone apps as Free Software.
RobotToaster 4y ago
The UK government has a pretty big github account https://github.com/alphagov https://github.com/alphagov
shagie 4y ago
Proprietary often has a lower total cost of ownership than the comparable loss of productivity and loss of support compared to open source software. Do you have a good example of a company that provides support comparable to Microsoft's www.office.com (word, excel, powerpoint, outlook, teams, and one note). Note that this is a web instance which means that the cost of installing and managing software updates on various computers is reduced. The lower taxes is not guaranteed at all when looking at the total cost of ownership. With open source software, this often means increasing the staffing (because there's no corresponding org that will do the support with the necessary SLA) which also means that there isn't necessarily more efficient government. The "better software for all to use" - switching to LibreOffice (or one of its forks) doesn't mean that the open source developers are going to prioritize the issues from Smith County, KS when there's an issue that impacts them. To go down this path of "lets have government use open source" it is first necessary to get the open source developers to want to make their product competitive for government use compared to the proprietary ones that are out there and for companies to step up and provide similar SLAs that Microsoft and others offer. That is something that can happen now, but isn't because there isn't enough interest from the FOSS community to do that for that sector. Trying to push the public sector to do it would be painful, expensive, and inefficient and not result in any better software.

throwaway892238 4y ago

Reasons why people pay for Red Hat: 1. Customer support 2. Certifications 3. Vendor support I don't know another distribution of Linux that provides all these things to the extent Red Hat does. You don't use Red Hat because you want to, you use it because it's the only choice. Any business could do exactly the same thing, and do it better than Red Hat. But there's really not much reason for a customer to move away from Red Hat if they're already on it, and it would take you a hell of a long time and a dumptruck full of capital to match them on the above. Open Core is not a business model, just like Open Source isn't a business model. A business model is promising to fix a customer's problem, certify their software, and get vendors to support them. That alone will get you a yearly renewing contract for a couple million that you then upsell over time.

dfc 4y ago
When I pay Redhat for customer support how is it different than the vendor support I pay them for?
- Spooky23 4y ago
  When you run enterprise product X on Red Hat version Y, that vendor will do less fingerpointing. They may even work with Red Hat in the backend to deal with bugs, etc. If you go put that on Debian or whatever, they’ll make you reproduce on RHEL. This becomes a big deal when you have RHEL, VMWare, and other vendors in the mix. If you ignore the certification, the app vendor or VMWare will just shrug at you.
Dalewyn 4y ago
>A business model is promising to fix a customer's problem, certify their software, and get vendors to support them. This can also be described as assuming liability. Fact of the matter is people don't want to assume liability themselves. If they can pay to get someone else to assume that liability (which Red Hat is happy to do) they will. The rest of the FOSS ecosystem on the other hand is all about assuming liability yourself. No warranties expressed nor implied, no support, no nothing. For a business that is simply not palatable. This is also why businesses happily pay tons of monies to Microsoft, Adobe, IBM, etc. for licenses and support. They assume liability, liability the businesses don't want to assume.

passterby 4y ago

[dead]

PeterZaitsev 4y ago

If you are looking for "Investable Hyppergrowth" Open Core is a great choice. If you want to maximize the value project proviedes to the universe sticking to Open Source is better choice

nimbius 4y ago

modern redhat --and this cannot be stressed enough-- is nothing like old redhat despite IBM's fervent insistance after the acquisition they would remain hands off. The hat killed Centos because some IBM midlevel manager needed to make quota for a bonus, and they didnt stop to realize just how unsuccessful this tactic was for Oracle/MySQL. moderen redhat is carved into about 40 seperate repositories and channels for packages designed to fleece you right down to the last RPM. need Ansible? sure it comes with redhat 9. need posix acl support from galaxy? that's another repo you didnt pay for. same goes for about a hundred other packages. redhat might have had great tech support in the past, but put a ticket in now and you're in IBM levels of "prove it" hell with SOSReport zips and zoom screenshares until your entry level support guy gives up the ghost and calls a developer, who tells you the bug cant/wont be fixed because libraries are hard or a rebase is impossible or any other number of boilerplate excuses why this ancient 4.x kernel based distro cant just source its solutions from fedora like they said they do and the flagships? forget it. Yeah Quay exists but try to implement it and youll find cool stuff like an administrator account defined in configuration but not created. once created in the admin panel youll have to go back and disable new user creation so you can control user creation at all, and the whole thing just feels rickety and poorly designed from the get-go. none of this is mentioned in the docs overtly, but is buried in Redhats bloated docs pages. just buy a quay hosted whatever from the hat instead. Openshift is equally appalling as its a massive ecosystem Redhats done virtually everything to control and nothing to distribute or competently document. its painfully obvious IBM wants you to hire a consultant to build and deploy it...There is an open-source offering, but it cant be easily rolled into an airgap installation and it suffers the same level of byzantine and poorly written documentation as Quay. K3S/RKE2 easily beat it for nearly every use case. Then theres the docker fiasco which unsurprisingly neither of these juggernauts wanted to deal with the others bullshit so now dockers broken in all but the most monied instances of IBM hardware. redhat became so absolutely resolute about podman being "everything you can do i can do too" that it has a fucking compose option to translate docker compose into podman because people like compose but rewriting your appstack to pods when you dont want to be arsed with k8s is sort of a non-starter.

dralley 4y ago
> The hat killed Centos because some IBM midlevel manager needed to make quota for a bonus, and they didnt stop to realize just how unsuccessful this tactic was for Oracle/MySQL. I cannot stress enough how untrue this is. See my comment https://news.ycombinator.com/item?id=35586311 https://news.ycombinator.com/item?id=35586311 RHEL clones were always going to exist, this is and was obvious, and there are more of them now than ever. That's not the point. The point is that now there is a way for RHEL clones, including ones from competitors like Oracle, have some way of contributing back to RHEL, whereas beforehand if you were a CentOS user your only possible course of action was to file a bug in the RHEL bug tracker and wait for a Red Hat employee to prioritize it. The business benefit is also a technical benefit - the ability to fix bugs and add features is no longer strictly limited by the amount of engineering capacity Red Hat can contribute. Companies like Facebook use CentOS Stream at scale internally and make contributions that ultimately end up in RHEL, users and vendors have a target they can integrate against early without needing gated betas, etc.

pankajdoharey 4y ago

The model is quite simple and it will work for others aswell, as long as onyone provide the software or core for free and for customized solution they will come to you.

huslage 4y ago

I was at Red Hat very early on. Red Hat has been remarkably consistent throughout its journey once it graduated from selling boxes of software at book stores (which was a necessary step). Red Hat only astook venture money once it was ready to go public and never before. The philosophy of Red Hat was to "make the pie bigger" and still largely is, therefore it supports open source first before anything else. This works because it provides product-market fit at scale and by nature. The thought that "all" Red Hat sells is software support, certifications, and subscriptions to updates is so short sighted and misses the point. Red Hat created an industry and all of the successful enterprise Linux distros have followed its model to some extent or another (Canonical, SUSE, etc). You don't need "open core" (which is a misnomer if there ever was one) if you continue down a path that creates and maintains communities of software authors out there in the world that will constantly feed value back into the ecosystem. A virtuous cycle of community maintained software alongside a thriving and growing business is still achievable, no one seems to have the guts to do it. (edited for typo)

commandersaki 4y ago
I find Redhat jumped the shark when it started selling its distribution with different licensing options that let you use different number of CPU cores.
- nine_k 4y ago
  I kept thinking that Red Hat's Linux offerings are properly FOSS, and the stuff you buy is support contracts. What are some per-CPU offers from them? (Because that's what I'd expect from Oracle, and hardly from RH.)
  - snuxoll 4y ago
    Per-core licensing is more or less limited to JBoss stuff and the likes. Stuff like RHEL, OpenShift Enterprise, etc. is typically licensed by socket-pair.
- 1letterunixname 4y ago

hash872 4y ago

>Getting contracts for development work with large customers can be difficult since most organizations already have preferred vendors for software development. Developing features under a support model gives you no entitlement to the technology. And, if you’re good at what you do, you’ll eventually put yourself out of a job since customers can use it without help But there are a large number of outsourced software development companies, some of them publicly traded- Cognizant/Infosys/Wipro types, plus Accenture, plus the new generation of Eastern European ones like EPAM and Grid Dynamics. Government-y ones like CGI. Oldschool companies offering consultancies like EY/Deloitte, etc. Hovering in the background is Toptal, which is technically different but I would imagine the bulk of their revenue comes from enterprise outsourced dev contracts. All of these companies are making this business model work somehow? And there are lots of them too. So it can't be that bad of a way to make money (yes I understand that these are not VC-investable businesses)

weare138 4y ago

The biggest reason why we don’t see support and services companies achieving hyper-growth is that they are uninvestable. Annual revenues are low and nonrecurring, and margins are tight. VCs are looking for 80%+ gross margins and hockey stick growth. In other words, Red Hat's model doesn't work for Wall St and VCs looking to make quick easy money riding out the next tech 'unicorn'. Red Hat has survived and thrived for 30 years now, while most modern VC backed tech companies are lucky to make it past 3. The infiltration of Silicon Valley VC vultures was one of the worst things to happen to the tech industry and why we rarely see sustainable startups like Red Hat anymore.

KennyFromIT 4y ago
I don't think this can be overstated enough. The incentives for vc-backed companies these days don't align with this model, hence the reason it's not more widely in use.
- scaramanga 3y ago
  And a very good argument for taxing that money out of their hands and investing it into productive enterprises that spur actual innovation and gainful employment.
JadedEngineer 4y ago
It's almost like building a company slowly, within your means, and focusing on improving the product, is the wrong way to do it these days. Better go with some BS that's flashy, make big claims and promises, and try to get some of that sweet VC money!

firatsarlar 4y ago

Is Red Hat an open source enterprise entity ? assume -> yes Did they share -> yes Did they serve o.s. community -> yes No, they worked for me too - not an enterprise -

penciltwirler 4y ago

Hold on... aren't there a bunch of incredily successful "open source" / "source available" companies? Databricks, Cockroach Labs, Hashicorp, MongoDB, Elasticsearch etc?

fourthark 4y ago
Yes this article is promoting the "open core" model those companies follow, as opposed to the "pure" open source model Red Hat follows.
- pjmlp 4y ago
  Which is basically PD and Shareware for post-2000 folks.
bonzini 4y ago
And how many of them are now trying to switch to fauxpen source licenses like MongoDB's SSPL?

wkat4242 4y ago

The RedHat model doesn't even work for RedHat anymore. They killed CentOS for a reason. Too few companies were paying for it.

deleted 4y ago

[deleted]

BenoitP 4y ago

You know what works just like the Red Hat model, but yields way better returns? The AWS model. Just take all these tech-tested market-tested open source projects, slap on a new name and bill them by the hour.

Jgrubb 4y ago
I'd be curious to know the revenue breakdown of all their various products as a percentage of the total. I wonder if all those products you reference bring in much $$ compared to the bread and butter ones that they started off with - EC2, S3, etc

kaba0 4y ago

One might argue that Oracle also made this model work. Not sure about their revenue between different divisions, but they finished open-sourcing even the last proprietary part of their JDK, making OpenJDK the reference implementation, plus they finance 90+% of all its commits. They make some revenue from selling OracleJDK licenses (and even most of those are free if you stay on the latest version) which includes support. Many of their customers are on older Java versions though, for example their Java 8 support is valid for something like 2030, so mostly government, big enterprises. (For some reason though, there is just endless bullshit around Java, even though the exact same model/license is true for the Linux kernel)

pjmlp 4y ago
The funny thing about Oracle haters is how they ignore that Oracle and IBM stand by Java since the early days, they collaborated with Sun on the Network Computer project, were one of the first SQL vendors to include the JRE on the database engine, provide a GUI based on Swing, JSF framework, JVM implementation, IDE, and so on. They also ignore the fact that Sun also charged money for support, JDK was only available as free beer with source on request, the whole Apache drama with the TCK, and access to legacy versions required a Sun developer account with license. Or that they were the ones introducing the separation of having UNIX for users, and an additional license for an UNIX SDK, which is what made people rush to improve GCC, until then mostly ignored project.
- Kwpolska 4y ago
  I think that most Oracle haters hate them for their obscenely expensive and often idiosyncratic database product, as well as their legal division being larger than their engineering division. And speaking of databases, the idea of running custom Java code inside the database seems like an abuse of the database. How many people actually use this feature, and how many of them like it (as opposed to having made a bad technical decision 20 years ago)?
  - pjmlp 4y ago
    Plenty, this is no different from running C and Perl, which Oracle did before, what PostgreSQL allows for (which Rust stable support being cheered over here last week), or running .NET on SQL Server. When performance matters, stored procedures are the way to go, not wasting network traffic and CPU cycles on the client, As it so happens, these additional runtimes are great and safer way to extend PL/SQL, pg/SQL, T-SQL,... than writing C extensions.

tannhaeuser 4y ago

RedHat is the employer of many Linux developers, including maintainers for GNU software etc., with SuSE and Canonical distant followers (at least it used to be like that). So I guess that makes them both a very significant contributor as well as deserved receiver of financial resources towards F/OSS. OTOH, apart from adaptions to ever-changing hardware, you could say that the times where Linux innovations are actually serving end users is long, long behind us, and anything RH pushed, such as systemd, gnome, and in particular podman (to take away from Docker ie what RH sees as their market, and theirs alone) etc. is basically zero sum software created out of a self-serving interest of selling support contracts by definition. That Linux isn't pro consumer is also evident by it being used for clouds and for a privacy-invading mobile O/S. Linux was nice and gave a direction to a developer community as long as it was chasing commercial Unix/POSIX with strong precedents and blueprints what to implement. Now it's just an IBM division.

pjmlp 4y ago
And in the process, a cheaper alternative to Aix. People that weren't there in the begining don't get it that Linux only really took off around the UNIX offerings of the early 2000's, when Oracle, Compaq, Intel, IBM money started be pumped into Linux in some form. The thing with UNIX/POSIX clones, is that there is hardly any inovation beyond adding new drivers and kernel features, as POSIX doesn't have anything else to offer.

Twisell 4y ago

I quite disagree with two ideas in this article: 1. For me until proven otherwise, RedHat have an OpenCore model, the CentOS shift is too recent to be meaningful. My company literally panicked about their CentOS servers because they didn't want a rolling distro and so decided to switch to something else free for low risk VM (worse I'm afraid) and pay RHEL support for critical applications. 2.There are a shitload of successful support company for real OpenSource product, the author just choose to ignore them. Maybe because they are mostly smaller and "uninvestable". Just look a the support advertised options for PostgreSQL in North-America only... https://www.postgresql.org/support/professional_support/northamerica/ https://www.postgresql.org/support/professional_support/nort...

asddubs 4y ago
why didn't they just switch to rockylinux?
- Twisell 4y ago
  They switched to Oracle Linux... and for the love of humankind don't ask me why... (At least they had the sense to switch to REHL for critical servers) Now on the app side we are left with some vendors that don't support installs on OracleLinux (because who would switch to that... again don't ask me why).
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rwmj 4y ago

(Note: I work for Red Hat) I'm constantly amazed that people still don't understand why Red Hat makes money, and this article won't enlighten you as it doesn't understand it as well as being full of other incidental mistakes (like their description of CentOS is way off the mark). Red Hat takes Linux and certifies it against all kinds of government, safety, privacy etc standardards, such as PCI and FIPS and numerous local ones. As a result if you are a government or many large companies you simply cannot download Linux and YOLO it. You are legally required to use the certified software so you take the path of least resistance and buy RHEL. That's it. It's why Red Hat makes piles of money, and Canonical or your SaaS does not. Understand what your big customers are required to have and provide it to them, even though it's boring and expensive to do.

AniseAbyss 4y ago
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gbraad 4y ago
And note; it is written by Sid Sijbrandij, who is the CEO of GitLab.
- rwmj 4y ago
  Thanks, I didn't make that connection. It explains a lot about why Gitlab are losing money hand over fist at the moment.
  - gbraad 4y ago
    The name is very obvious to me; quite a 'unique' Dutch name, and he used to be the classmate of a colleague of mine. While he doesn't mention the name in the article, the Open Core references align with their own offering.
hahnchen 4y ago
Does redhat have customors who don't need government compliance? If so, why do they use red hat?

scaramanga 3y ago

The article describes, almost perfectly, the condition of being a productive enterprise within a capitalist free-market in which you are subject to competition. What is striking is how, for observers within the tech-industry, this is perceived as a peculiar and inexplicable state of affairs, almost as if an alien creature has materialized through a portal into an alternate universe.