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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