October 23, 2003

Red Hat CTO says Fedora lets company 'Concentrate on the enterprise'

Author: Robin 'Roblimo' Miller

WASHINGTON, D.C. - In a keynote speech Wednesday at the Enterprise Linux Forum, Red Hat CTO Michael Tiemann bluntly stated that today the company's "focus is on the enterprise."Tiemann also said the software world "can no longer afford the folly of proprietary architecture."

While Red Hat will now concentrate on building its enterprise distribution and associated applications, the company will support the now-independent Fedora Project as, essentially, a replacement for the old free-to-download user-level Red Hat.

Tiemann's speech coincided with Red Hat's rollout of its new, substantially upgraded and highly scalable Enterprise Linux version 3, which costs $179 per year for a single workstation, including basic support, and nearly $3000 per year per year for the top-end server version, including 24/7 phone support.

These are the same prices Red Hat charged for its previous versions of Red Hat Enterprise Linux, and users who have already purchased RHEL 2.1 can upgrade to the new version at no charge.

Red Hat seems to be taking a cue from Sun's support of OpenOffice.org as a 100% free project while selling essentially the same code, plus some add-ons, as StarOffice. OpenOffice.org experiments in ways that StarOffice does not. One example is an in-progress Mac OS X port. Successful experiments are available for later StarOffice inclusion.

Fedora, said Tiemann, will provide "the stimulus and the R&D" behind many future Red Hat innovations. And while Fedora explores the leading edge of Linux, Red Hat will concentrate on producing stable, mature enterprise products -- and, obviously, on marketing those products.

Fedora has replaced the old, 100% free Red Hat Linux Project, which essentially was "Red Hat" to legions of downloaders. There has been a "free for the download" version of Red Hat since Mark Ewing released his first version of "Red Hat Linux" in October, 1994.

The only mention of the Fedora Project on Red Hat's main page as of 23 October 2003 was a small button in the lower right-hand corner that did not describe it in any way.

In a Boston Globe article published 16 October 2003, Red Hat CEO Matthew Szulik was quoted as saying, "Our goal is to become the defining technology of the 21st century."

Obviously, that goal can't be reached without substantial income.

So far, even though some old-line members of the free and open source software communities do not like Red Hat's recent concentration on the enterprise market, the strategy seems to be working in a financial sense. Red Hat declared its first operating profit last quarter -- $240,000 -- and the company's revenues have consistently increased year over year (this year's target gross is $115 million) at a rate similar to that experienced by Microsoft when the first Wintel boom was in full swing.

In the short term, Red Hat's decision to divorce its "free" and "pay for" offerings from each other has obviously been a roaring success. Whether this move will help Red Hat (or Linux or open source) become "the defining technology of the 21st century" remains to be seen.

But don't forget: Unlike Microsoft, which is and always has been the only publisher of the Windows operating system, Red Hat faces competition from at least 10 'major' Linux distributions. And hundreds of 'minor' ones. That is a factor that will keep Red Hat from ever achieving 100% domination of the Linux market -- or from ever realizing profit margins as large as Microsoft earns from its core products.

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