Alan Hargreaves' Weblog

Forbes follow up article on Open Sourcing Solaris

I just read an interesting article in Fortune where Jonathon Schwartz has responded to David Kirkpatrick on the Open sourcing of Solaris. The article is titled Why Open Source Doesn't Always Mean Free and Jonathon makes some interesting points and appears to have brought David around to thinking that this may actually be a good idea.

A couple of particularly interesting paragraphs were

What Schwartz's remarks underscore, and what I admittedly hadn't fully digested until now, is that open source means something quite different once it becomes a critical part of the enterprise infrastructure. Companies will pay a lot to ensure that their backbone systems are properly cared for, regardless of the development model under which the software was created. Nothing shows this more than the success of Red Hat. Its revenues for the fiscal year ended in February rose 39% to $126 million. And while it lost money the previous year, it made $14 million this time. And growth is accelerating. In the most recent quarter, ended in May, revenues grew 53%. More important, CEO Matthew Szulik has made a deft transition to a subscription and support model. Red Hat's enterprise subscription revenues are more than doubling annually. Since the renewal rates of these subscriptions exceed 85%, this is a great annuity. No wonder Sun wants a piece. In the past year Red Hat's stock has roughly tripled, and its market cap stands at $3.7 billion. Not bad for a company whose product is supposedly free. (Sun's market cap stands at $14 billion, and its stock is about 20% lower than a year ago.) Perhaps Red Hat will want to respond to Schwartz in a future column.

Posted at 08:51PM Jun 26, 2004 by Alan Hargreaves in Solaris  |