Red Hat CEO: We're not cutting prices
Matthew Szulik is on the record today saying that Red Hat has no plans to cut its prices. Good for Red Hat. When you're already #1 in customer value two years running, a shot over the bow shouldn't lead to widespread panic.
Oracle claims to be offering for support for Red Hat Enterprise Linux. They're not. As Red Hat notes, and as even a cursory investigation would reveal, open source software is not about the bits. It's about the support and the innovation you put into the bits. That's what Red Hat charges for.
It's what Oracle can't replicate with a keynote and a few webpages. Oracle could support Linux - arguably very well. But Oracle didn't choose to support Linux, a technology. It announced that it is offering support for someone else's product, but in the process confused the old world definition of "product" (bits which we can charge big upfront license fees for, as Oracle does) for the new world's definition (support, RHN, etc., for which Red Hat earns its keep over time through a subscription).
That is, Oracle announced support for...Red Hat's support, thinking that it was announcing support for Red Hat's bits and bytes.
It's a bit like me saying I'm now offering support for IBM Global Services. Sure, I could try. I could "fork" those services. But would you buy them? Neither would I.
In like manner, Oracle can offer huge discounts on Red Hat Enterprise LInux - the bits and bytes. But it's hard to discount beyond what the discounts Red Hat already offers: 100%. How much lower than free can Oracle go?
No, Oracle tried to confuse the issue, or was simply confused. It can't support Red Hat Enterprise Linux, because really Red Hat's product is the service it puts into the kernel, both pre- and post-sale. Oracle can declare that it will answer the phone faster, but who cares? it won't (and can't) have the answers when you call? It can say that it's supporting Red Hat's...support, but it isn't.
Oracle is offering nothing with this move. But at least it's offering 50% off.
1 comments:
I think not dropping prices is a smart move on RedHat's part. The stock buyback plan is also a good, confident move.
At the end of the day while some people might see this as a blow to Open Source business models I think it may end up having a vaccinating effect...not too dissimilar from what happened (is happening) with the whole SCO intellectual property debacle...in the end it will just reaffirm the strength of the smart open source companies, and convince the not so smart ones to rethink their strategy.
RedHat now has the opportunity to make it clear that what they provide is more than "just support". It is hardware and software certification, It is the development of a partner ecosystem, It is government security certifications, It is customer/community based innovation, It is R&D Based Innovation (GFS, SELinux, Virtualization), It is Social Innovation (OLPC). In short, it is about delivering superior value to your customers.
On the flipside, I think this will help keep RedHat honest. As a publicly traded company, there is a certain amount of pressure from stock holders to find ways to cut corners in ways that help the immediate bottom line but hurt the customer, but as an Open Source based company, that pressure gets balanced out by the fact that what you are selling is not the actual code itself. Unless you continue to deliver serious value year, after year, after year, your competitors will try to step in and take your code and your users. If RedHat's stockholders didn't get that before, they will sure as hell get it now.
I still think there are some markets for which the RedHat sticker tag is still too high (small-medium businesses, third world countries, non-profits, etc). I would love to see them come up with some innovative solutions to better serve those communities. OLPC is a good example of the kind of disruptive and innovative thinking that is needed; focus on the problem that needs to be solved, rather than just trying to cram together the existing hardware, software and licensing paradigms to create a solution.
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