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August 19, 2008

There are many in the Linux community that will tell you Red Hat is a rather successful company, and that its main focus is open source development circles. However, did you ever wonder why Red Hat spends so much time focusing on the JBoss middleware market?

And also, why does it spend so little time trying to make Linux a desktop standard instead?

The simple answer and the simple truth involves some "dry facts" but nevetheless a little bit of mind boggling open source math.

In 2007 alone, Red Hat had over $400 million in revenue, according to numbers published on its own website. And it expects this year to be about 10 to 15 percent better than last year's performance.

Here is Red Hat's little secret (some would say a well-guarded secret) on how it makes a good chunk of its revenue: For every single dollar a corporate customer spends on JBoss (an open source Java application server), that same customer typically spends another $10 to $12 on related JBoss consulting and integration services.

That information comes from none other than Mark Enzweiler, Vice President, Global Channel Sales at Red Hat.

Before you discount any of this, here's what Enzweiler had to say about this: “JBoss middleware is like a central nervous system. It’s so mission critical that customers are willing to pay Red Hat or the company’s integration partners roughly $11.12 in consulting fees for every $1.00 they spend on JBoss itself."

Get it?

However, and this is the big kicker, Enzweiler hasn’t been able to come even close to making a very strong business case for signing Linux desktop OEM agreements. And does he care?

To a certain degree, Ubuntu Linux and Novell SuSE Linux earn a few headlines here and there when they win a new business deal. But during preliminary OEM negotiations, Enzweiler determined that computer makers “basically wanted Desktop Linux for free.”

And at such low prices, Enzweiler worries that Linux distributors may wind up compromising their support models to gain market share on the desktop. Is it really worth it?

Should Red Hat focus a bit more on Desktop Linux?

Well, try to remember that Microsoft used its desktop position in the 1990s as a strong springboard onto the server. And servers is where most of the money is these days, at least for Red Hat and some of its partners...

Of course, Red Hat certainly doesn’t appear too concerned with any of this, and why should it be anyway?

Enzweiler continues to evangelize Server Linux and JBoss Middleware to Red Hat’s integration partners. And to this date, some basic math clearly reveals that Enzweiler’s strategy is a good one and that is seems to work pretty well for Red Hat and its partners.

So, as Beth Midler would say: "Why bother?"

Source: IT Direction.

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