8 ms·

So many shaky premises here that I barely know where to start. 1) Canonical. You could have made the exact same argument as this article 10 years ago and sai

by adwf 13y ago

So many shaky premises here that I barely know where to start. 1) Canonical. You could have made the exact same argument as this article 10 years ago and said that there wasn't room for another RedHat. Canonical arrived and proved that yes, there is room for another profitable Linux vendor. I know I use Ubuntu server and am considering support contracts, so there is definitely a market. 2a) So Redhat doesn't have the resources for development that Microsoft has and therefore will produce an inferior product? Have you seen Windows 8? Vista? Money does not guarantee success. 2b) Even without the same resources, the main Linux kernel has an enormous number of top-talent developers working for free. This is a serious economic advantage over traditional closed source companies. 3) Why on earth is the article comparing RedHat to Amazon? One is a Linux distribution vendor, the other is a global internet shopping mall. I'm sure others can provide more reasons. Or even counterpoints; feel free to rebut ;)

spindritf 13y ago
Canonical is not profitable.
- cwyers 13y ago
  The parts that do what Red Hat do are; the overall lack of profitability is because Canonical is losing money on other market segments. (In other words, they're generating money to be invested in developing new products, exactly what the article says open source companies can't do.)
- adwf 13y ago
  My bad. Perhaps I should have said sustainable. Canonical is not going to disappear. They may have unprofitable ventures, but ultimately they can cut it back to the core business and carry on going. Got to spend money to make money!
pacofvf 13y ago
> Why on earth is the article comparing RedHat to Amazon? I don't understand that and not because: > One is a Linux distribution vendor, the other is a global internet shopping mall. I don't understand that because Red Hat already does what Amazon does: http://www.redhat.com/solutions/open-hybrid-cloud/ http://www.redhat.com/solutions/open-hybrid-cloud/ I don't know if Peter Levine knows that.
- adwf 13y ago
  Yes, but the article is comparing the total Amazon revenue in the $70bn+ range to the RedHat ~$1.3bn. A completely misleading comparison, considering that Amazon don't actually break out their AWS figures in their financial reports. Those charts are highly misleading and borderline duplicitous.
  - nl 13y ago
    He shows estimated AWS revenue on [1], where he appears to be using the $3.8 billion revenue estimate. I regard that estimate as defensible, and a reasonable indicator of the size of the market. [1] http://tctechcrunch2011.files.wordpress.com/2014/02/peterlevine2.png?w=675&h=460 http://tctechcrunch2011.files.wordpress.com/2014/02/peterlev... [2] http://www.zdnet.com/amazons-aws-3-8-billion-revenue-in-2013-says-analyst-7000009461/ http://www.zdnet.com/amazons-aws-3-8-billion-revenue-in-2013...
    - cwyers 13y ago
      Yes, because "providing service and support for software running on someone else's hardware" is the same as "maintaining large datacenters, including hardware, power and cooling costs," and therefore let's just compare revenues without looking at costs.
      - nl 13y ago
        If I was an investor, and I saw Redhat growing revenue at the rate AWS seems to be then I'd be buying as much Redhat stock as I could - even if their profits were depressed because of the investment they were making. I'll quote the investment guidance from the link I posted above[1]: Using our estimate of $3.8bn for 2013 AWS revenues, and applying a ~5x multiple based on the comps noted above, we arrive at a valuation of ~$19bn for the business on an EV/Sales basis (equating to ~$41/share of AMZN stock). Importantly, we believe this to be a conservative valuation multiple, as AWS revenues are growing much faster than any of the comps incorporated above. At an 8x valuation multiple, we estimate the AWS business could be worth $30bn as a stand-alone company, or ~$66/share. Note that they value AWS as a $30bn company right now, almost triple Redhat's $11bn market cap. From [2], we see that Amazon has has invested $4.6 billion in its business over the past year, including $1.4 billion to purchase the building that houses its Seattle headquarters.. Taking out that $1.4 billion, we get $3.2 billion, which almost matches estimates for AWS revenue. So we see AWS is growing like mad, pretty much owns the whole cloud hosting category[3] and MIGHT NOT EVEN BE LOSING AMAZON MONEY, even while they are investing so much that no one else can compete with them on scale of their offerings already. Take my money now. [1] http://www.zdnet.com/amazons-aws-3-8-billion-revenue-in-2013-says-analyst-7000009461/ http://www.zdnet.com/amazons-aws-3-8-billion-revenue-in-2013... [2] http://www.informationweek.com/cloud/infrastructure-as-a-service/amazon-web-services-revenue-new-details/d/d-id/1112068 http://www.informationweek.com/cloud/infrastructure-as-a-ser...? [3] http://readwrite.com/2013/08/21/gartner-aws-now-5-times-the-size-of-other-cloud-vendors-combined http://readwrite.com/2013/08/21/gartner-aws-now-5-times-the-...
Edmond 13y ago
>2b) Even without the same resources, the main Linux kernel has an enormous number of top-talent developers working for free. This is a serious economic advantage over traditional closed source companies. I am not familiar with the actual org structure of Linux kernel contributors besides Linus being the leader but isn't it the case that most of the major contributors are in fact employed by companies (including Red Hat)? In other words not devoting their time working for free...or am I off?
- adwf 13y ago
  For RedHat it's free. http://arstechnica.com/information-technology/2013/09/google-and-samsung-soar-into-list-of-top-10-linux-contributors/ http://arstechnica.com/information-technology/2013/09/google... If 10% are paid by RedHat, 90% aren't - therefore count as free to RedHat. Even then, the single largest group are non-aligned developers.
  - Edmond 13y ago
    I agree Red Hat and pretty much every other contributor's result is a net gain. The point I was making is that the overall contribution isn't free. ie the folks working on it are paid by various companies. I believe all the major tech companies have a few devs that they basically loan out to the kernel development effort.
    - adwf 13y ago
      Yes, there's potential for a Tragedy of the Commons style problem to happen with kernel development, where each corporate developer suddenly decides to save money and not contribute, whilst letting everyone else pay. Eventually everyone would follow suit and nothing would get done. Not exactly the same as the Tragedy of the Commons, but similar in the sense that it works best when everyone works together. NB: It's also important to note that some kernel work is actually on drivers for specific products. eg. Intel's contributions are largely making sure that all their hardware will work in a Linux server/desktop, not necessarily the kind of general Linux ecosystem development that Canonical might do.
nl 13y ago
Canonical arrived and proved that yes, there is room for another profitable Linux vendor. Cananical only had $65.7 million in revenue in 2013, and made losses of $21.3 million[1]. I think that proves his point rather well. So Redhat doesn't have the resources for development that Microsoft has and therefore will produce an inferior product? Have you seen Windows 8? Vista? Money does not guarantee success. Microsoft's product development problems are well documented. Their money making capacity is equally as well known. Their last quarter broke revenue records for them[2], helped by growth in both enterprise and cloud. Even without the same resources, the main Linux kernel has an enormous number of top-talent developers working for free. This is a serious economic advantage over traditional closed source companies. There are a number of unpaid contributors to the kernel, but the vast majority are paid by companies. 83% of kernel 3.10 was funded by a range of companies.[3] Why on earth is the article comparing RedHat to Amazon? One is a Linux distribution vendor, the other is a global internet shopping mall. Are you trolling? The author posted a graph showing how AWS (Amazon web services) has more than double the revenue of RedHat. That's why other operating system vendors are (eg, Microsoft) are pushing into the cloud space, and why RedHat's lack of a coherent story on cloud is a big problem for them. [1] http://arstechnica.com/business/2014/01/ubuntu-maker-boosted-revenue-in-2013-but-doubled-loss-to-21-million/ http://arstechnica.com/business/2014/01/ubuntu-maker-boosted... [2] http://www.pcworld.com/article/2055455/record-first-quarter-sales-for-microsoft-but-windows-oem-revenue-falls.html http://www.pcworld.com/article/2055455/record-first-quarter-... [3] http://arstechnica.com/information-technology/2013/09/google-and-samsung-soar-into-list-of-top-10-linux-contributors/ http://arstechnica.com/information-technology/2013/09/google...
- adwf 13y ago
  A lot of Microsofts growth in recent years has been in enterprise tools, not operating systems. Amazon do not break out their AWS revenue from their main revenue, hence one of the reasons it's a dodgy claim. Not to mention the fact that the article included the total Amazon revenue in the charts for no good reason. Likewise for Microsoft, who have multiple large revenue streams in the form of Office, etc... Not to mention Oracle, who are a database company that dabble in Linux (I've never actually met anyone who uses "Unbreakable" linux - yes, yes, anecdotal I know). When you remove the specious data points from the graph, you're left with RedHat on it's own. Even if you include the AWS estimate, you still have a much more reasonable graph that indicates RedHat competing in the same ballpark as AWS.

by adwf 13y ago

spindritf 13y ago

Canonical is not profitable.

cwyers 13y ago
The parts that do what Red Hat do are; the overall lack of profitability is because Canonical is losing money on other market segments. (In other words, they're generating money to be invested in developing new products, exactly what the article says open source companies can't do.)
adwf 13y ago
My bad. Perhaps I should have said sustainable. Canonical is not going to disappear. They may have unprofitable ventures, but ultimately they can cut it back to the core business and carry on going. Got to spend money to make money!

pacofvf 13y ago

> Why on earth is the article comparing RedHat to Amazon? I don't understand that and not because: > One is a Linux distribution vendor, the other is a global internet shopping mall. I don't understand that because Red Hat already does what Amazon does: http://www.redhat.com/solutions/open-hybrid-cloud/ http://www.redhat.com/solutions/open-hybrid-cloud/ I don't know if Peter Levine knows that.

adwf 13y ago
Yes, but the article is comparing the total Amazon revenue in the $70bn+ range to the RedHat ~$1.3bn. A completely misleading comparison, considering that Amazon don't actually break out their AWS figures in their financial reports. Those charts are highly misleading and borderline duplicitous.
- nl 13y ago
  He shows estimated AWS revenue on [1], where he appears to be using the $3.8 billion revenue estimate. I regard that estimate as defensible, and a reasonable indicator of the size of the market. [1] http://tctechcrunch2011.files.wordpress.com/2014/02/peterlevine2.png?w=675&h=460 http://tctechcrunch2011.files.wordpress.com/2014/02/peterlev... [2] http://www.zdnet.com/amazons-aws-3-8-billion-revenue-in-2013-says-analyst-7000009461/ http://www.zdnet.com/amazons-aws-3-8-billion-revenue-in-2013...
  - cwyers 13y ago
    Yes, because "providing service and support for software running on someone else's hardware" is the same as "maintaining large datacenters, including hardware, power and cooling costs," and therefore let's just compare revenues without looking at costs.
    - nl 13y ago
      If I was an investor, and I saw Redhat growing revenue at the rate AWS seems to be then I'd be buying as much Redhat stock as I could - even if their profits were depressed because of the investment they were making. I'll quote the investment guidance from the link I posted above[1]: Using our estimate of $3.8bn for 2013 AWS revenues, and applying a ~5x multiple based on the comps noted above, we arrive at a valuation of ~$19bn for the business on an EV/Sales basis (equating to ~$41/share of AMZN stock). Importantly, we believe this to be a conservative valuation multiple, as AWS revenues are growing much faster than any of the comps incorporated above. At an 8x valuation multiple, we estimate the AWS business could be worth $30bn as a stand-alone company, or ~$66/share. Note that they value AWS as a $30bn company right now, almost triple Redhat's $11bn market cap. From [2], we see that Amazon has has invested $4.6 billion in its business over the past year, including $1.4 billion to purchase the building that houses its Seattle headquarters.. Taking out that $1.4 billion, we get $3.2 billion, which almost matches estimates for AWS revenue. So we see AWS is growing like mad, pretty much owns the whole cloud hosting category[3] and MIGHT NOT EVEN BE LOSING AMAZON MONEY, even while they are investing so much that no one else can compete with them on scale of their offerings already. Take my money now. [1] http://www.zdnet.com/amazons-aws-3-8-billion-revenue-in-2013-says-analyst-7000009461/ http://www.zdnet.com/amazons-aws-3-8-billion-revenue-in-2013... [2] http://www.informationweek.com/cloud/infrastructure-as-a-service/amazon-web-services-revenue-new-details/d/d-id/1112068 http://www.informationweek.com/cloud/infrastructure-as-a-ser...? [3] http://readwrite.com/2013/08/21/gartner-aws-now-5-times-the-size-of-other-cloud-vendors-combined http://readwrite.com/2013/08/21/gartner-aws-now-5-times-the-...

Edmond 13y ago

>2b) Even without the same resources, the main Linux kernel has an enormous number of top-talent developers working for free. This is a serious economic advantage over traditional closed source companies. I am not familiar with the actual org structure of Linux kernel contributors besides Linus being the leader but isn't it the case that most of the major contributors are in fact employed by companies (including Red Hat)? In other words not devoting their time working for free...or am I off?

adwf 13y ago
For RedHat it's free. http://arstechnica.com/information-technology/2013/09/google-and-samsung-soar-into-list-of-top-10-linux-contributors/ http://arstechnica.com/information-technology/2013/09/google... If 10% are paid by RedHat, 90% aren't - therefore count as free to RedHat. Even then, the single largest group are non-aligned developers.
- Edmond 13y ago
  I agree Red Hat and pretty much every other contributor's result is a net gain. The point I was making is that the overall contribution isn't free. ie the folks working on it are paid by various companies. I believe all the major tech companies have a few devs that they basically loan out to the kernel development effort.
  - adwf 13y ago
    Yes, there's potential for a Tragedy of the Commons style problem to happen with kernel development, where each corporate developer suddenly decides to save money and not contribute, whilst letting everyone else pay. Eventually everyone would follow suit and nothing would get done. Not exactly the same as the Tragedy of the Commons, but similar in the sense that it works best when everyone works together. NB: It's also important to note that some kernel work is actually on drivers for specific products. eg. Intel's contributions are largely making sure that all their hardware will work in a Linux server/desktop, not necessarily the kind of general Linux ecosystem development that Canonical might do.

nl 13y ago

Canonical arrived and proved that yes, there is room for another profitable Linux vendor. Cananical only had $65.7 million in revenue in 2013, and made losses of $21.3 million[1]. I think that proves his point rather well. So Redhat doesn't have the resources for development that Microsoft has and therefore will produce an inferior product? Have you seen Windows 8? Vista? Money does not guarantee success. Microsoft's product development problems are well documented. Their money making capacity is equally as well known. Their last quarter broke revenue records for them[2], helped by growth in both enterprise and cloud. Even without the same resources, the main Linux kernel has an enormous number of top-talent developers working for free. This is a serious economic advantage over traditional closed source companies. There are a number of unpaid contributors to the kernel, but the vast majority are paid by companies. 83% of kernel 3.10 was funded by a range of companies.[3] Why on earth is the article comparing RedHat to Amazon? One is a Linux distribution vendor, the other is a global internet shopping mall. Are you trolling? The author posted a graph showing how AWS (Amazon web services) has more than double the revenue of RedHat. That's why other operating system vendors are (eg, Microsoft) are pushing into the cloud space, and why RedHat's lack of a coherent story on cloud is a big problem for them. [1] http://arstechnica.com/business/2014/01/ubuntu-maker-boosted-revenue-in-2013-but-doubled-loss-to-21-million/ http://arstechnica.com/business/2014/01/ubuntu-maker-boosted... [2] http://www.pcworld.com/article/2055455/record-first-quarter-sales-for-microsoft-but-windows-oem-revenue-falls.html http://www.pcworld.com/article/2055455/record-first-quarter-... [3] http://arstechnica.com/information-technology/2013/09/google-and-samsung-soar-into-list-of-top-10-linux-contributors/ http://arstechnica.com/information-technology/2013/09/google...

adwf 13y ago
A lot of Microsofts growth in recent years has been in enterprise tools, not operating systems. Amazon do not break out their AWS revenue from their main revenue, hence one of the reasons it's a dodgy claim. Not to mention the fact that the article included the total Amazon revenue in the charts for no good reason. Likewise for Microsoft, who have multiple large revenue streams in the form of Office, etc... Not to mention Oracle, who are a database company that dabble in Linux (I've never actually met anyone who uses "Unbreakable" linux - yes, yes, anecdotal I know). When you remove the specious data points from the graph, you're left with RedHat on it's own. Even if you include the AWS estimate, you still have a much more reasonable graph that indicates RedHat competing in the same ballpark as AWS.