Red Hat - Last of the Mohicans

Will Red Hat be the Only Old School Open Source Company Ever to Make $1 Billion?

Matt Asay, a well-known open source leader has posted a new article on The Register at http://www.theregister.co.uk/2011/03/29/red_hat_billions/ about Red Hat making it to $1 billion in revenue and how he doubts that any other truly open source company can make it to $1 billion in revenue. From the article:"Will there be another Red Hat, a pure-play open-source company with $1bn in revenues? I doubt it. Not only is Red Hat unique in its market and its execution within that market, but other companies have found even more powerful ways to build businesses around open source without having to sell open source, itself. Like Google. Like Facebook."This article indicates that having an open source only company is not a successful business strategy as Red Hat is such a unique case that is not likely to be duplicated. My initial instinct is to question this theory, as everyone knew that IBM owned computers, Yahoo owned the Internet followed by Google followed by Facebook. It seems to me a big stretch to definitively state that an open source only business model is unlikely to succeed like Red Hat.   However, when looking at the current open source projects making a significant gain in the industry, it is corporations working together to create a standard platform to build unique solutions and services on that is making waves. The Xen hypervisor, OpenStack project, and Android are excellent examples of these types of projects. This type of business model has no direct comparison to the Red Hat open source model other than the code being open source. In fact, open source is no longer a stand-alone business strategy but rather a development technique used to gain competitive advantage or establish market share by open source and proprietary companies.

The days of open source versus proprietary companies seems to have ended and open source seems to have won in an unexpected way. Instead of seeing a stand-alone open source business model like Red Hat, we now have open source embedded into all types of companies as a way to better serve customers, rapidly develop solutions, or share development costs and expertise.

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Copyright © 2011 IDG Communications, Inc.

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