Red Hat, the first billion-dollar Linux company

Red Hat announced the results of its fiscal year, stating that the company surpassed 1 billion dollars in revenue. More importantly, Red Hat is said to be the first open source company ever to achieve this level of earnings, a feat that shows how viable the “free” software business has become.

Red Hat’s total earnings at the end of its fiscal year (February 29) amounted to 1.13 billion dollars, and unsurprisingly the best part of the money (952 million dollars) came from subscription products: the company business model is to sell quality assurance, customer support, integration and training services for the Red Hat Linux Enterprise OS 24 hours a day, seven days a week.

“This achievement will finally put to bed the argument that ‘nobody can make money with open source’", Linux Foundation executive director Jim Zemlin commented on the Red Hat announcement, granting that “Red Hat has worked extremely hard and extremely smart to leverage open source to make a billion dollars”.

The company that was famously called a “cancer” by Microsoft CEO Steve Ballmer is now driving a strong business based on its Linux code, something that Microsoft founder Bill Gates as much notoriously dismissed as a competitor “in the student and hobbyist market” and really not “in the commercial market” ruled by the Redmond’s products.

The important business result achieved by Red Hat is even more significant if compared with its closest competitor's (SuSE Linux) ability to pick “merely” 170 million dollars yearly. Nevertheless, not everyone agrees with the “first FOSS billion dollar company” definition put up by Red Hat: Techdirt’s opinion is to consider first and foremost big companies like IBM, Google and Facebook as “open source companies”, and to give credit to their ability in leveraging the FOSS (Free and Open Source Software) movement for making and selling something completely different – and much, much more profitable than Red Hat’s subscription business.

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28 Comments

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Red Hat was the first distro I ever used. Ah, the memories *tear*.

But seriously, anyone else ever think their logo was a lizard/dinosaur waving at you? I swear I didn't see the hat until like months after first seeing the logo.

Slayer said,

But seriously, anyone else ever think their logo was a lizard/dinosaur waving at you?

Now that's all I can see when I look at that logo. Thanks.

IBM is more of a software and services company nowadays than a Hardware company.

Facebook and Google's platform run primarily on Open Source software modified for their purposes or software developed in-house that was later open sourced. Neither technically sell software or hardware, they both are ad selling and displaying companies for the most part.

xpclient said,
They should make less frequent Fedora releases (every 1.5 years) and give it a longer life cycle like RHEL.

That is what Centos and Scientific linux are for.
Fedora is supposed to be bleeding edge.

Shiranui said,

That is what Centos and Scientific linux are for.
Fedora is supposed to be bleeding edge.

That's the problem with all Linux distros. Too much change every 6 months, excessive change isn't good.

xpclient said,

That's the problem with all Linux distros. Too much change every 6 months, excessive change isn't good.

As stated above you can always go with more stable distros with long release cycles like CentOS.

Home users usually want all the bleeding edge shiny stuff and they want it now. That's why short release cycle distros are popular, and then they also double as testbeds for technologies that will be bundled with more stable distros later.

xpclient said,

That's the problem with all Linux distros. Too much change every 6 months, excessive change isn't good.

This from a guy still using a 10yr old OS. Of course you don't like change we know.

I think it's good that they're successful, even if not every single penny of their revenue comes from selling RedHat Linux, the fact that they are first and foremost an open source company, and are doing well, shows that all you need is the right leadership. Dump the frizzy haired college kids who think Linux is cool because it's free, go after some real experts and professionals, and you can do pretty well for yourself.

They didn't make billion dollars selling Linux. They sell several other enterprise products such as Jboss enterprise SOA platform, etc.

kavazovangel said,
What is so open source about Facebook and Google?

for FB nothing except their API
Google well
Android http://source.android.com/source/downloading.html
Chromium , ChromiumOS
WebM , WebP...
most of their work is open license and avalaible to make it work under any OS
They also use a lot of OSS in their core product like in Google Play Music Manager
Google Talk use XMPP as their protocol fot chat
VP8 that will be use in their WebRTC protocol for video streaming/chat without plugins even skype now use VP8

They also introduced their language OSS http://golang.org/

cork1958 said,

They both "openly" sell all your info!!

Actually,
I think this is great news for Linux and Red Hat. never really liked that distro, but then that's part of what is cool about Linux/open source. Freedom to chose/switch.

kavazovangel said,
What is so open source about Facebook and Google?

Are you out of your bloody mind? I hate facebook but they've released all this for free:
Hiphop-PHP,
Tornado,
Phabricator,
PHP-phutil,
Javelin,
diviner,
Flushcache,
Open-Graph-Protocol,
Cassandra (Adopted by Apache),
Hive (Also adopted by Apache),
In fact, they've released so much open source software, I can't even list it here, have a look for yourself; https://github.com/facebook and http://developers.facebook.com/opensource/

IBM and Google don't make their billions from software though and Facebook shouldn't even be counted here since they don't sell anything, except maybe ads. Google's billions come from Ads and IBM's comes from HW. Redhat is the first to make a $1billion just on selling Linux.

SharpGreen said,
IBM and Google don't make their billions from software though and Facebook shouldn't even be counted here since they don't sell anything, except maybe ads. Google's billions come from Ads and IBM's comes from HW. Redhat is the first to make a $1billion just on selling Linux.

you have a source for the IBM numbers? I believe most of their money still comes from software to business and the backend support they provide other companies. I rarely see any piece of IBM hardware, but when it comes to software running a POS system or backend software, I've only seen IBM. they make a killing on support.

macrosslover said,

you have a source for the IBM numbers? I believe most of their money still comes from software to business and the backend support they provide other companies. I rarely see any piece of IBM hardware, but when it comes to software running a POS system or backend software, I've only seen IBM. they make a killing on support.


Ok..you're right I should've been more specific and said they didn't sell Linux.

Its not hard to make money selling support for an OS that is so annoyingly and unnecessarily complicated that no one can be bothered to figure it out.

exotoxic said,
Its not hard to make money selling support for an OS that is so annoyingly and unnecessarily complicated that no one can be bothered to figure it out.

I guess all the training programs and support services Microsoft (and other companies) provide for Windows Server (and everything attached to it) is just their for s**ts and giggles then.

exotoxic said,
Its not hard to make money selling support for an OS that is so annoyingly and unnecessarily complicated that no one can be bothered to figure it out.

If it was that complicated, they wouldn't be selling support for very long now would they?

exotoxic said,
Its not hard to make money selling support for an OS that is so annoyingly and unnecessarily complicated that no one can be bothered to figure it out.

It's for people like you who don't have the time or energy to understand why the OS is the way it is. And the blindingly ignorant.

exotoxic said,
Its not hard to make money selling support for an OS that is so annoyingly and unnecessarily complicated that no one can be bothered to figure it out.

Guess Windows 8 will fail then Mr Troll.

This company is truly amazing. I especially like their Fedora distro (which they sponsor), and their efficient corporate structure. A really great company; I just hope they can remain that way for the coming years.

Just shows how its not all about the product that can make the money directly.
But these rules don't apply in the consumer market!