Open Source Software Company Set to Earn $1 Billion

Open Source Software Company Set to Earn $1 Billion

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Somehow, giving away a Linux build for free might make Red Hat a boatload of cash.

Back in the 1990s, open source software was met with derision from traditional boxed software companies like Microsoft or Adobe. How can you make any money by giving away your product to anyone who wants it? Well, apparently the model of giving away a software suite and charging only for support and infrastructure works quite well, especially in an economy where businesses and individuals must cut costs wherever possible. The Raleigh-based Linux provider, Red Hat, announced today that its latest quarter revenues exceeded $281 million and that it is poised to make a billion dollars this year.

"Based on the strong first half results, we believe Red Hat remains well-positioned to finish fiscal 2012 as the first billion dollar open source software vendor," said Jim Whitehurst, head of Red Hat.

The open-source movement has impacted gaming in a lot of ways and the success of Red Hat is yet another signal of what's to come. Wizards of the Coast - the makers of Dungeons & Dragon - made the bold move of giving away its D20 ruleset for free with the OSR to encourage innovations across the tabletop RPG landscape, subtly overtaking the market. Much of the backlash against the 4th Edtion of D&D was its repealing of the open platform that the OSR established in the 3.5 era. After offering such freedom, pulling back behind the restrictive GSL has fractured the tabletop market.

The emergence of free to play MMOs owes a lot to the open source movement. Gamers are not always allowed to create content (although City of Heroes experimented with this idea) but giving a game away for free seems to be more profitable than charging for the service. Microtransations of convenience or cosmetic items are similar to Red Hat selling support and service for its Linux products; the consumer gets the chance to test the product and see its potential before paying fees to cater the experience to the consumer's wishes. And as everyone from SOE's John Smedley to Firefall's Mark Kern says, soon all MMOs will be free to play.

Yes, gaming owes a lot to the open source movement. Now, if only Linux could play more games without a hack.

Source: Yahoo

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Very nice article.
And, as a linux user, I have to agree with that last statement. If only there were more games that could be played without hacks.

The problem of these UNIX based systems is that there are A LOT of 'em and an average user just gets lost in such a vast amount of OSs. And these penguins DO NEED that average user to ever overcome the 1-2% barrier of installs on desktops.

Greg Tito:
Somehow, giving away a Linux build for free might make Red Hat a boatload of cash.

"Based on the strong first half results, we believe Red Hat remains well-positioned to finish fiscal 2012 as the first billion dollar open source software vendor," said Jim Whitehurst, head of Red Hat.

Littlefinger, is that you?

Greg Tito:
Somehow, giving away a Linux build for free might make Red Hat a boatload of cash.

OK the reason why its going to make $1 billion is not because it gives away copies of Linux. Its because Red hat sells enterprise Linux. Enterprise Linux is far closer to a windows 2007 server than the fedora linux which it gives away. As you can see from the price list https://www.redhat.com/apps/store/server/ , the prices are of the same order of magnitude as windows. The $1 billion comes from a small percentage of the global sever market. The conclusions drawn by the news item are just not relevant because fedora hardly impacts on its main business. Red hat no longer brands Fedora as Red hat but refers to it as a Red Hat sponsored community project. http://fedoraproject.org/

Don't forget google and facebook, both are open-source companies and essentially give away to the user for free. I wish there were more good games on linux :(

Esotera:
Don't forget google and facebook, both are open-source companies and essentially give away to the user for free. I wish there were more good games on linux :(

Uh... The sourcecode of facebook is open? I don't think so. Neither is the google source. Also, they don't give away to the user for free, your data (be it search statistic, your own personal data, etc.) is good compensation. To put it better: you are selling yourself way below price.

Femaref:

Uh... The sourcecode of facebook is open? I don't think so. Neither is the google source. Also, they don't give away to the user for free, your data (be it search statistic, your own personal data, etc.) is good compensation. To put it better: you are selling yourself way below price.

Well the same could be said of Red Hat. You get the OS for free, but you're pretty much screwed if you don't get a decent sysadmin/help from the company, which costs money. It doesn't actually cost the typical user anything to use google or facebook, but they do profit from the information...there's a loose connection there.

And you might be right on the source being closed, many people seem to say it's an entirely open-source company, but I haven't found anything to support that. They do support a lot of FOSS projects though: http://developers.facebook.com/opensource/?_fb_noscript=1

 

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