So me and some of my friends were discussing the upcoming IPO of Red Hat, the company behind Linux. Now Linux to the best of my knowledge is a free OS that can be downloaded for free by anyone. This sounds great to the casual surfer, but it got us wondering.
Question 1: How in the hell is this company gonna make any money? They don’t charge for their software, and I don’t recall any annoying ads or pop ups that they could sell. Now this has been billed as possibly the biggest internet IPO ever, I haven’t checked recently, but it may have actually gone pulbic by now, but I haven’t checked and compared it to other internet stocks. So where’s the income?
Question 2: We have hypothesized that the stock prices are merely propped up by consumer confidence and stuff like the US economy etc. If there is any truth to this theory what does that say about the stability of the tech stock market?
Now short of disecting the technobabble in their Prospectus, I wonder if you folks who are more worldly that I can shed a bit of light on this for me.
The facts expressed here belong to everybody, the opinions to me. The distinction is
yours to draw…
Question #1: Red Hat markets a commercial version of Linux. True, no one owns Linux, but Red Hat sells a CD-ROM version, technical manuals, and support. I think they have the best installation package as well.
Question #2: I don’t know–I lost my ass last week.
{{{Now Linux to the best of my knowledge is a free OS that can be downloaded for free by anyone.
Question 1: How in the hell is this company gonna make any money? They don’t charge for their software, and I don’t recall any annoying ads or pop ups that they could sell.
Question 2: We have hypothesized that the stock prices are merely propped up by consumer confidence and stuff like the US economy etc. If there is any truth to this theory what does that say about the stability of the tech stock market?}}}—Omniscient
Actually, there are quite a few versions of Linux on the market–many of them are free for the downloading, in a way similar to UNIX. Red Hat is far from the only version out there.
Check out the Caldera web site.
They will make money the way shareware authors do: support of a good product. BTW: the full version of Red Hat sells for $24.95 at CostCo. If you don’t pay for the OS and just do the D/L, you get the basics of the Linux OS and no support.
Buy the full version and you get something on the order of 7 CDs (loads of whistling bells) and product support (you know the drill: upgrades, etc.).
You’ve pretty much summed up the innards of the entire stock market, and it is still with us today.
As someone who is using RedHat 6.0 right now, I feel prepared to respond.
First of all, RedHat is not the only company behind Linux. It is only the most successful one. There are many different releases of Linux (RedHat, SuSE, Slackware, Debian, to name a few).
No one can charge for the software itself. This is true. However, companies like RedHat can and do charge for distribution (when you buy a RedHat CD, they get money), and companies can offer support packages.
You don’t need to buy anything from RedHat to get their distribution. You can download it. But a CD with docs is a popular alternative to a 500 MB download.
If people are saying that this is the biggest IPO ever, I think we are running into a hype alert. It is very likely that RedHat will quickly become over-valued, just like many internet stocks.
Linux itself has a great deal of momentum. There seems to be an attitude that if anything can challenge MS, it’s Linux. At this point, that’s still a pretty bold statement, but we will see.
Can you try and explain the system to me a bit. I’ve been aquainted with the early Linux download and used it a little just to experiment on a University computer. Now I am confused by the fact that you say there are several companies behing Linux. I apparently assumed wrongly that Red Hat either bought or is a renamed company that owns Linux. Now is Linux public domain? If so, do these multiple companies simply take publicly available Linux, package it, advertise it, and sell support for it independant of the will of the creator? And do they sell different versions, or is it all he identical version to the original with simply different packaging and support?
This might not be perfectly accurate, but this is my understanding of it…
Linux is a unix-style operating system that was created by Linus Torvalds. Originally it was developed for the Intel x86 platform, but has since ben expanded to include sparcs (Sun), alphas (DEC), and PPCs (Macs).
The “core” of linux is pretty much the same, no matter which distribution you get. The core is essentially the “kernel” code. The kernel is a the fundamental program of an operating system, which controls the applications that are run on the system, and how those applications utilize the hardware. The linux kernel version distributed with Redhat 6.0 is linux 2.2.5
Like many programs common to unix platforms, linux is developed collectively, and is usable under the GPL (“GNU public license”, see http://www.gnu.org ). I don’t know who has what developmental control on the linux kernel, but Linus Torvalds is still an active participant, so I would expect he still has a lot of control.
Outside of the kernel, most of the contents of linux distributions are not exlusively a part of linux. Most of the rest of the distribution are common unix applications (also available under the GPL). Some applications have specifically been written for linux (rpm, GNOME, enlightenment), but they aren’t a core part of linux, and may vary from distribution to distribution. The main thing is that all of the programs that come in linux packages are free (usually under the GPL).
As new versions of the linux core are developed and released, anyone can build a package around them, and distribute it as long as they obey the terms of the GPL. The conditions of the GPL include things like: Any non-official modifications of the software most be documented, and modified versions must also fall under the GPL. The software in and of itself cannot be sold, and must be made available for free, but reasonable charges can be made for distribution.
AFAIK, all notable linux distributions come with officially released linux core versions.
If you want to know what Red Hat might be doing a year from now, you might look at what Netscape is doing today. Ultimately, all they are really selling is a brand name. - MC
Red Hat Linux can be downloaded for free, or purchased as a package with a manual and tech support; the latest version of Red Hat, 6.0, is $75 at Best Buy (up from $35 for the last version). However, I bought the full CD distribution of Red Hat 6.0 from Linux Central, a web business that repackages the software distributions, for only $2.75.
The software is free; the different competitors mentioned above are fighting on the battlefield of manuals, support, and installer software. Red Hat’s installer is very good, but so are SuSE’s and Caldera’s.
The last year has also seen the rise of competitors for Dell and Gateway: startups in California and elsewhere are building linux boxes: computers configured and pre-installed with Linux in a well-tested configuration. All with free software.
Besides the GNU site above, check out Opensource.org, the vaguely official mouthpiece for the open source movement that nurtured Linux along. Also, the Free Software Foundation is a slightly more radical variant. Both contain lots of information on viable business models for open source software.
He has several remarkably readable papers on the Open Source movement and its economic and cultural differences from most other software development and distribution.
Bob the Random Expert
“If we don’t have the answer, we’ll make one up.”
