[linux-elitists] Red Hat borrows $500M

Michael Bacarella mbac@netgraft.com
Wed Jan 7 09:23:25 PST 2004

> > Red Hat hasn't yet established itself as a company that will always be
> > there for the customer. 


> > And dropping the desktop with their flamboyant "okay, we've been living a
> > lie -- take those boxes back to Windows" proclamation sure didn't help in
> > solidifying their image, either.
> Yeah... in fact, with many companies, it's done exactly the opposite. 
> We all spent hours telling the PHBs "yeah, this Linux-thing will save the
> company tons of money... it's free!" They went with RedHat because "RedHat
> = Linux" and "They provide support! And since we're used to M$'s shit
> breaking, we need support!"
> Now we all look like idiots because RedHat decided that the desktop was a
> worthless battle... right when it seemed they were starting to make
> inroads, too. And workstation is no longer "free." Oh no. It's $300/machine
> "free."
> That's one of the great things about open source, though... the fact that
> RedHat made such a tactical error as to piss off their unseen core
> customers (home users, hobbyists, and smaller companies) could be the
> beginning of the end for them... but since it *is* open source, we have to
> ask ourselves "Why do I care?"

Giving your product away for "free" until it reaches critical mass
and then charging for it is a tried and true business model.  Even
if 80% of your "customers" leave you've still converted 20% into
paying customers.

If anything, this means the beginning of the beginning for Red Hat.

For the 80% who chose not to, no big deal.  There are only thousands
of other Linux distributions out there.  If it decreases Red Hat's
installed base maybe ISVs will offer packages in forms other
than solely rpm.

Michael Bacarella                24/7 phone: 1-646-641-8662
Netgraft Corporation                   http://netgraft.com/

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