Red Hat and Acquia thrive on complexity

The most successful open-source business model to date may also be the one least able to consistently deliver growth.

Drupal is a fantastic Web publishing platform that derives much of its value from a disparate community of contributors, as Xconomy recently wrote. With more than 4,000 contributed modules from over 3,000 active contributors (741 of which contribute to Drupal Core), Drupal has something for everyone, which is both its greatest asset and biggest liability.

Choice is good. Too much choice, however, can be bad.

The same holds true for Red Hat, which charges a premium for its Red Hat Enterprise Linux distribution to enterprises that want to tap into Linux but don't want the bother of rolling their own version of Linux from Kernel.org.

The problem, however, is that such a business model depends upon the complexity of the underlying platform. If that complexity goes away, does the business model?

The Drupal-focused company Acquia is thriving because deploying Drupal, what with its myriad of choices, can be complex. Ditto for Red Hat. There are thousands of packages that comprise Linux, making it worthwhile to pay a trusted guide like Red Hat.

But Red Hat CTO Brian Stevens suggest s that "you need product complexity" to make its model work. Does this mean that Red Hat and Acquia will be hitting the unemployment lines if they do their jobs too well, and Drupal and Linux become too easy to use?

I don't believe so, but that is certainly one way to read IDC data that shows unpaid Linux adoption is now outpacing commercial Linux adoption , which has the potential to disrupt Red Hat, Novell, Canonical, and other Linux vendors.

It's less an issue, however, for Acquia, which has been rolling out for-free software and services to augment Drupal , including enterprise-class search. Acquia's Drupal distribution teases the complexity out of Drupal, but it also extends beyond Drupal with enterprise-only features. It is therefore well-positioned to foster the Drupal community while simultaneously feeding its top and bottom lines.

For this reason, I believe Acquia's model has more staying power, though it has a long way to go before it generates Red Hat's nearly $1 billion in annual revenues. Acquia's model allows it to thrive even if Drupal becomes easy, and also affords the company greater latitude to enter new markets, like the application market, where product complexity is not as much of an issue.

Red Hat, on the other hand, must resolutely focus on core infrastructure, an area of the software stack that is naturally prone to such complexity, because of its adherence to its complexity-dependent business model.

Both models are generating impressive returns. But Acquia's open-source model seems to offer more potential in the long term than Red Hat's does.


Follow me on Twitter @mjasay.

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About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.

     

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