[kwlug-disc] How Canonical makes money ...

Lori Paniak ldpaniak at fourpisolutions.com
Sat May 15 17:36:01 EDT 2010

On Sat, 2010-05-15 at 17:19 -0400, unsolicited wrote:
> John Van Ostrand wrote, On 05/15/2010 2:58 PM:
> > ----- "unsolicited" <unsolicited at swiz.ca> wrote:
> >> That's what Red Hat did, though, did they not? And they've been
> >> pretty successful? Profitable, even? Eventually?
> > 
> > Red Hat's financials say they have revenue of $541M for
> > subscriptions, that means support, and $111M for training and
> > services. Profit was $78M in 2009. And it looks like they've been
> > profitable since 2005 (the last figures given in the report I'm
> > reading.) It's pretty good that it sees 12% net profit.
> > 
> > I'm inferring from the text in the report that $45M was training
> > and $66M for consulting and engineering services. They make money
> > from OEMs (presumably IBM, HP, Dell, etc.) for engineering services
> > and from large customers. Both want functional changes to the
> > software.
> So, the key, for Red Hat, if not the space, would seem to be hw vendor 
> buy in for a reasonably consistent revenue stream. And I guess they 
> would be somewhat entrenched - i.e. it would probably take some doing 
> for Canonical to get themselves in as well, if not instead, of Red Hat.
> I wonder what it would take for Canonical to accomplish that, or, what 
> other vendors are out there they could get sufficient traction with.
> Contrast this with, I suppose, Novell / Suse. Also, IIRC, profitable. 
> But, I guess, somewhat more diversified.

The real problem with commercial ubuntu uptake is getting software
vendors to certify their applications to run on (at least) LTS releases.
A surprising number of applications run on Linux, but usually only RHEL
is officially sanctioned.  Nevermind that it also runs on ubuntu - when
it comes time to build a production system, you have to use RHEL/CentOS.
Once people are "allowed" to use ubuntu, the demand for approved
hardware and support will increase.

Red Hat probably had the same bump to overcome in the late 90's, now it
is Canonical's turn. 

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