Archive of UserLand's first discussion group, started October 5, 1998.
Re: RedHat has no product
Author: Paul Snively Posted: 10/2/1999; 1:55:56 PM Topic: RedHat has no product Msg #: 11706 (In response to 11688) Prev/Next: 11705 / 11707
Kam Cheung wrote:Dave, you are partially right. RedHat doesn't have a really distinguish product to sell. You don't have to PAY for RedHat Linux, just download the installer and you can install RedHat Linux over the web, period.
What you have missed is that, they are selling services, not products -- whether this is worth a $5.844 billion market cap is, of course, another story.
I think this is an oversimplification on a couple of fronts.
First, Red Hat did indeed develop several pieces of their distribution--GNOME, RPM, and PAM come immediately to mind--so they arguably add significant value to "Linux" (remember that "Linux" is just a kernel; *most* of the value of the Red Hat distribution actually comes from GPL'ed software). So they do indeed have a "product." They have a few SKU's of that product: one is the GPL-only distribution that anyone can download for no money. Another is that distribution on CD-ROM plus a CD-ROM of licensed software plus printed documentation plus packaging that they do charge money for. Another is that distribution but with Apache + OpenSSL + mod_ssl + credit-card-processing software instead of bare Apache plus a CD-ROM of licensed software plus printed documentation plus packaging that they do charge money for. Another product is their Motif product, which they do charge money for. Another is their CDE product, which they do charge money for...
Then there's their service business.
The thing that's missing in this whole conversation, though, is what an organization like Red Hat really sells, which is trust. Red Hat has some very sharp Linux developers. They work hard to ensure that the Red Hat distribution works. They sweat whether any given software upgrade, from the kernel on down, goes into their updates or into a new release. Sometimes, when it doesn't work, they fix it (one of my favorite aspects of the RPMS source package distribution format is that it supports this cleanly: the source RPM can contain a virgin .tar.gz file and one or more patch files; the .spec file contains instructions to extract the archive and apply the patches before building).
Ultimately this is the product of any successful company. It's what's meant when people start bandying the word "brand" around. Red Hat has a highly respected brand in the Linux community. Don't confuse the notion of having a good brand with the notion of the traditional product or service business models. Then it will become apparent why Red Hat is worth $5.844 billion to investors.
Thanks for reading,
Paul Snively
<mailto:psnively@earthlink.net>
This page was archived on 6/13/2001; 4:52:55 PM.
© Copyright 1998-2001 UserLand Software, Inc.