models

A simple formula to gauge a freemium model's success

For all the value that open-source development provides, Red Hat CEO Jim Whitehurst recently reminded the industry that open source may be more potent as a business model than as a development model:

Open-source development is great and all that, but I think more of the value of Red Hat comes from our open-source business model than from the development model.

The truth of this statement came home clearly to me in a conversation with Michael Mullany, vice president of marketing at Engine Yard, a cool company that provides on-demand deployment and management solutions for Ruby on Rails applications. Mullany … Read more

Red Hat celebrates its 10-year IPO anniversary

Ten years ago today, on August 11, 1999, Red Hat saw its shares triple in an initial public offering that ushered in a new era of commercial open-source prosperity.

Iain Gray, then a Sun employee and now Red Hat's vice president of Global Support, writes nostalgically: "I remember sitting in the Sun office in UK watching the stock skyrocket, thinking the world had gone mad."

Indeed it had. Soon Red Hat's stock was to plummet to earth but not before the company learned a valuable lesson: there must be more than hype to make open source … Read more

A movement for meaning-driven business?

Frog Design's promised series on “Meaning-Driven Business” is taking shape. After introducing the concept of “Chief Meaning Officer” in the “Power” issue of design mind, we are going to formally launch this new forum in our upcoming special TEDGlobal issue (to be released on Sept. 21, 2009) as well as on a special microsite to be launched in a couple of weeks.

For the first round of essays, we are delighted to have received contributions from three industry and thought leaders: Beth Comstock, chief marketing officer of GE and one of the world's most influential Fortune 50 marketing executives, will take the economic crisis as an opportunity to make the case for marketing-driven innovation. Werner Bauer, Nestle's chief technology officer and head of innovation, will describe his company’s concept of “Shared Value” and how it enables a more socially responsible business. And Dev Patnaik, founder and chief executive of innovation consultancy Jump Associates and author of the book Wired to Care, will illustrate how “high-empathy organizations” of all kinds prosper when they tap into a power each of us already has: the ability to reach outside of ourselves and connect with other people. Stay tuned!

The conversation is continuing in other outlets, too, and some pundits want “meaning” to not only be an abstract concept, but a movement. Economist Umair Haque is one of them. His "Generation M (as in “meaning”) Manifesto" stirred some controversial reactions (just read the comments on his blog)--from unconditional endorsement to accusations of arrogance and naiveté. It is one out of many manifestos that have recently been published on the new “new economy”--this, too, is a sign of the times. Manifestos indicate an increased need for ideological alternatives – and meaning.… Read more

Bandwidth.com's investment in FreePBX paying dividends

In 2008, Todd Barr left Red Hat to try his hand at an open-source start-up. Now, one and a half years later, Barr is doing just that, hoping to turn the telephony world upside down at Bandwidth.com, a company that operates a proprietary voice network, but is betting a great deal on the open-source FreePBX project.

This shouldn't be surprising, given the increasingly intertwined fates of proprietary and open-source software. But it's interesting to watch Bandwidth.com--a 10-year-old company that sells business voice and data services--incorporate open source into its strategy. After all, the company recently built … Read more

SpringSource, Canonical, and MySQL join Red Hat on Microsoft's hit list

For years, Microsoft had it easy. The two busiest groups within the software behemoth were the accountants, adding up all the billions in profits, and the CD/DVD burning team, which simply had to burn more copies of Windows and Office to keep up with demand.

Today, life is a little less rosy for Microsoft, as it calls out in its recent 10-K filing with the Securities and Exchange Commission. As TechFlash highlights, Google Android is now called out by Microsoft as a competitor, as are Apple, Opera, and Google in browsers, whereas only Mozilla was deemed worthy of Microsoft'… Read more

Red Hat: 'We spend over $100 million a year to advance Linux'

Matthew Szulik, Red Hat's former CEO and current chairman, has been in semi-retirement for the past two years, but you'd never know it from listening to his interview with the BBC's Peter Day. Szulik, ever the revolutionary, talks up open source's opportunity to disrupt conventional software and promote social reform.

As he does so, however, he inadvertently describes Red Hat's winning open-source business model as directly parallel to the Web 2.0 business models deployed by Google and others. While this isn't surprising (I've written about it before), it was the first time … Read more

Commercial open source's awkward teen years

At this week's Oscon conference, someone asked me what the secret to commercializing open-source software is, as if a secret cabal has been jealously guarding some arcane knowledge.

My response? "There is no secret: we simply don't know how to do it very well yet."

One thing, however, is clear: while the Web promises a brave new world of technical and financial prosperity, getting there from here is still very much in doubt. If we think of companies like Google as Software 2.0 and old-school vendors like IBM as Software 1.0, this leaves open-source … Read more

'Free' is(n't) a four-letter word...

Just as Amazon and Google are obliterating profit margins for old-school publishers, so, too, is open source putting the squeeze on them, whether in cloud computing or in search or...you name it. As the world digitizes, there's a mad rush to commoditize everyone else's business. This is good for consumers (low prices!) but not so good for vendors (low margins!).

The problem (and promise) of digitization is, of course, "free." Everyone loves to pay "free," but few really enjoy selling it. Or competing with it.

As Bill Gurley suggests: "The key question … Read more

Red Hat: From manic acquisitions to focused execution

Red Hat is at the top of its game right now, delivering quarter after quarter of impressive performance despite (or, perhaps, because of) a global recession. But it wasn't always thus. Despite a meteoric initial public offering in 1999, Red Hat spent years fumbling about for a winning game plan, dabbling in technologies that took it far beyond its core competence in operating systems.

Small wonder, then, that Red Hat today hasn't risen to the bait to move beyond its core competence.

In fact, it may well have been the burden of its IPO that set Red Hat … Read more