Red Hat: 'We spend over $100 million a year to advance Linux'
Red Hat's business model is really not much different from that of Web companies like Google and Facebook: all are built on open source and include proprietary software on top.
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 (), it was the first time I've heard Red Hat state it so baldly:
Think about [open source] like mining. There's all of these natural resources buried under the ground.
But unless you have a large aggregator to pull it out of the ground; to take the gold or the coal or the copper and turn it into something usable, then it's really not useful for mankind.
[Day interjects, "But Linux was usable before, wasn't it?"]
It was usable by the 14 people that are sitting in Cambridge or Oxford right now. It was really not a mainstream technical activity.
Red Hat develops some of the open-source software it distributes. It is the primary contributor to the Linux kernel,, and spends, by Szulik's estimation, "over $100 million per year to advance Linux and open source [development]."
But Red Hat, like Google, Facebook, and other "Software 2.0" companies that heavily employ open-source software, gets more than it gives to open source. It is a net beneficiary.
Sure, as Szulik goes on to explain to Day, Red Hat "puts all of that [$100 million worth of] intellectual property into the public domain," which differs from Google and others that write a lot of proprietary software that is never shared with external developers, but the core model of building upon open-source software and wrapping it with proprietary services is very much the same model employed by every significant Web company today.
I'm also willing to bet that Google contributes more than $100 million worth of intellectual property as open-source software every year,, at least in terms of lines of code contributed.
I Web companies pick and choose where to contribute back, but it all seems to work out in the end. Yahoo works on Hadoop while Red Hat releases KVM while Google releases Gears while...you get the picture. Different companies releasing and "free-riding" on different open-source code, with the entire industry growing and benefiting in the process.that the
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