Red Hat And The Power Of Infinite Goods
from the economics-of-free dept
The New York Times has a great write-up of the continued rapid growth of Red Hat. Despite the looming recession, Red Hat is predicting 30 percent revenue growth in the coming year, to more than half a billion dollars. For a few years, Mike has been talking about how to make money while giving away infinite goods, and Red Hat could probably be the poster child for his argument. Despite the fact that virtually all of its "products" are available for free on the Internet, Red Hat is still convincing companies to pay it hundreds of millions of dollars. Of course, the reason this works is that Red Hat's product isn't its operating system or other software. Red Hat's product is access to the time and expertise of its employees, and to Red Hat's extensive ecosystem of developers, hardware vendors, and others who have built atop the Red Hat platform. Because Red Hat stands at the center of this tight-knit web of relationships, their employees are better-positioned than anyone else to quickly solve customer problems. And it turns out that companies are willing to pay hundreds of millions of dollars for that assistance.
The most interesting part of the article is where it talks about Oracle's effort to undercut Red Hat by offering the same software at a lower cost. Apparently, as we predicted, it hasn't been going too well. And it's not too hard to see why: Larry Ellison doesn't seem to understand Red Hat's business model. What Red Hat is selling isn't software, but support. And the value of a support contract is a function of the expertise of the company providing it. Not only does Red Hat have a number of key Red Hat developers on staff, but it also has a ton of strong working relationships with developers and vendors elsewhere in the Linux community. That means that if a customer encounters a bug in its Red Hat Enterprise Linux installation, Red Hat will either have an engineer on staff who can fix it, or it will have a strong relationship with the outside developer who developed that piece of software or the firm that manufactured the hardware. That makes it more likely that it will be able to address the issue quickly and incorporate the fix into the software for future releases.
Oracle has made comparatively little effort to either hire Linux developers or foster strong relationships with the broader free software community. As a result, Oracle isn't able to provide the same kind of value that Red Hat can. Yes, Oracle tech support can fix straightforward problems, but if they need to make changes to the code, they'll often need to go to a Red Hat engineer for help getting it fixed. And not surprisingly, most customers would rather cut out the middleman and go to Red Hat directly, even if it costs a little more.
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Filed Under: earnings, infinite goods, open source
Companies: oracle, red hat
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support...
Btw, Oracle does has hired some smart people too, check out CRFS.
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Wait a Second
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Re: Wait a Second
RH is just fine, I have been using their products for years now and if one is an experienced programmer/administrator there is little to worry about as I have never had to refer to their support system once since everything I've ever needed is found online in forums. If one works for a mult-million/billion dollar company, it might be wise to invest in support on a "just in case" basis.
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Re: Wait a Second
So far, we haven't bought a single damned thing...
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WTF?
Red Hat's support can be pretty bad at times. I think what people are really buying is an insurance policy against being sued by their shareholders for irresponsibly using unsupported software.
Btw, Oracle does has hired some smart people too, check out CRFS.
(reply to this comment) (link to this comment)
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Are u kidding me?
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Re: Are u kidding me?
If your IT staff didn't have that kind of sense, it's safe to say that you'd need a new IT dept.
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WTF?
FUD FUD FUD FUD FUD!!!!!!!
support... by Steve on Mar 28th, 2008 @ 8:30pm
Red Hat's support can be pretty bad at times. I think what people are really buying is an insurance policy against being sued by their shareholders for irresponsibly using unsupported software.
Btw, Oracle does has hired some smart people too, check out CRFS.
(reply to this comment) (link to this comment)
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Re: WTF?
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Stealing to Support Loss Leader Business Model
“Red Hat And The Power Of Infinite Goods (Earnings, IPOs, and the like)
by Timothy Lee from the economics-of-free dept on Friday, March 28th, 2008 @ 5:39PM”
“The New York Times has a great write-up of the continued rapid growth of Red Hat. Despite the looming recession, Red Hat is predicting 30 percent revenue growth in the coming year, to more than half a billion dollars. For a few years, Mike has been talking about how to make money while giving away infinite goods, and Red Hat could probably be the poster child for his argument. Despite the fact that virtually all of its "products" are available for free on the Internet, Red Hat is still convincing companies to pay it hundreds of millions of dollars.”
And
“Another 'Free' Business Model Experiment (Culture)
by Michael Masnick from the they're-all-over dept on Friday, March 28th, 2008 @ 3:16PM”
“When we discuss the basic economics having to do with infinite goods, sometimes the debates in the comments accuse me of promoting one "business model" over all others. The truth is quite different. The economics at work are fundamental. Price gets driven to marginal cost.”
In these comments they freely acknowledge the point I have been making for some time concerning the loss leader business model where someone gives away something in order to drive sales of their services or of other products.
Now there is nothing wrong with this business model as long as they are giving away their own property. But most of these businesses are founded on giving away other’s property without their permission. In other words their business model is like that of a chop shop which installs stolen auto parts and charges to install those parts. They are still crooks, and all the rationalization in the world does not change the unvarnished truth of this.
These crooks will rationalize that they are really Robin Hood reincarnated. Yet when caught no one buys their claims except their fellow thieves. The same is true in the free software community. To the degree that their business model is based on giving away property which is not theirs to give they are simply another bunch of thieves who reinforce each other’s incredibly wrong thinking.
The leaders of the anti-software patent movement frequently make their living by supplying services, authoring books, etc. Many claim their work is inventive but this is questionable and in the absence of having their work judged via the patent process they simply cannot make a credible case that they have done anything more than copy other's inventions by coding a solution in a marginally different way. Even if they are inventing they are not teaching others the invention and therefore have chosen to keep their work essentially secret, much as guilds used to jealously guard the secrets of their trade to exclude others from practicing the inventions. In many ways they are treating their knowledge as a trade secret.
As long as there has been software, engineers have been making tradeoffs between implementing an invention in hardware or software or a combination of the two. As electronics have shrunk and processors have become more powerful an ever greater number of inventions are best implemented via software.
Denying inventors’ protection via patents is sure to lead to the same problems which society had when guilds kept knowledge secret.
One of the beauties of software based invention is that it has low capital requirements. Anyone who is willing to work hard and has a great invention can prosper. A software patent can be a great equalizer allowing a lone inventor to challenge a big vested interest and to win epic battles.
Ronald J. Riley,
Speaking only on my own behalf.
Affiliations:
President - www.PIAUSA.org - RJR at PIAUSA.org
Executive Director - www.InventorEd.org - RJR at InvEd.org
Senior Fellow - www.patentPolicy.org
President - Alliance for American Innovation
Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
Washington, DC
Direct (202) 318-1595 - 9 am to 9 pm EST.
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Re: Stealing to Support Loss Leader Business Model
Ronald, simple question: if you run a pizza shop, and another pizza shop opens up down the street, have they stolen from you or are they just competing?
I'm curious as to your answer.
These crooks will rationalize that they are really Robin Hood reincarnated. Yet when caught no one buys their claims except their fellow thieves. The same is true in the free software community. To the degree that their business model is based on giving away property which is not theirs to give they are simply another bunch of thieves who reinforce each other’s incredibly wrong thinking.
Aside from your total inability to comprehend the difference between theft and infringement (which really hurts your argument, by the way), I'm curious if you've noticed the large economic impact thanks to open source software. You do realize that the internet itself is built on open source software. And nearly every successful internet company is built on open source software.
Are you suggesting that we would be better off as a society without all of that?
Many claim their work is inventive but this is questionable and in the absence of having their work judged via the patent process they simply cannot make a credible case that they have done anything more than copy other's inventions by coding a solution in a marginally different way.
Ronald, very simple question: have you ever written a line of software code?
Do you honestly believe that the USPTO is the sole arbiter of whether or not software is legitimate?
Even if they are inventing they are not teaching others the invention and therefore have chosen to keep their work essentially secret, much as guilds used to jealously guard the secrets of their trade to exclude others from practicing the inventions. In many ways they are treating their knowledge as a trade secret.
You clearly have no clue how software works. I'm going to make a suggestion for your own good: you probably should keep your comments directed at non-software patents. You have enough trouble there. Once you touch on software, you show your complete ignorance very quickly.
Denying inventors’ protection via patents is sure to lead to the same problems which society had when guilds kept knowledge secret.
Funny. You recognize that software patents are a recent thing? And prior to software patents, the software industry thrived? Yeah, funny how that worked...
Software, by its nature, is not a "trade secret."
Also, Ronald, since you think not having patents is sure to lead to that same situation, can you explain why that DIDN'T happen when the Netherlands got rid of patents? And why that DIDN'T happen when Switzerland chose not to implement a patent regime? Why did both countries speed up their industrialization and innovation during those periods?
Based on your reasoning, that would be impossible.
So, again, Ronald, we have proven you as being wrong -- and we have done so by pointing to actual FACTUAL situations.
I assume that in your response you will not respond to these questions and that you will repeat the libelous statements you have made about me in the past. I would appreciate that, before you try that again, that you actually provide proof of your baseless accusations against me. Otherwise, we can infer that you know you have no real argument and are resorted to lies and name calling.
It's rather simple, Ronald. Supply your evidence or admit that you were wrong.
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Re: Stealing to Support Loss Leader Business Model
Do you want me to point to free software projects' large source code repository?
The mysteries are out there in the open ready to be looked at by anybody in the world. We intentionally provide the secret sauce to anybody who want it and is willing to follow the rules of the GPL.
Rationalize as Robin hoods? We don't think we're robin hoods either. We don't steal. If anything, we're thinking we're working to liberates the users from control by monopolists like you.
Why don't you compete instead of suing everybody? That's a serious waste of brainpower there. You should be inventing and thinking about bringing your invention to the market place. Lengthy court cases and patent extortion is what inventors should not be doing.
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Re: Re: Stealing to Support Loss Leader Business M
The last sentence should be:
Lengthy court cases and patent extortion are what inventors should NOT be doing.
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Re: Re: Re: Stealing to Support Loss Leader Busine
How many patents do you have in your name ?
None would be my educated guess
When you have at least one patent just try to bring it to the market
Go for it and tell us about your experience
Until such time I respectfully ask you to SHUT THE FUCK UP !
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Re: Re: Re: Re: Stealing to Support Loss Leader Bu
I don't know how to do the productive work of bringing software to the marketplace with patent. As far as I understand, it is unnecessary.
If there is anything that patents do for me to help do my work, I don't see. So my experience will undermine your's argument instead.
So you're a patent expert. Tell me how to use it.
If anything, patents are useless piece of crap unless you need to ward off competitors looking for quick cash suing you. Might as well abolish patents.
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Re: Re: Re: Re: Stealing to Support Loss Leader Bu
Now, that's funny. Angry dude, of course, came here a few years ago and started bashing everyone, claiming he had multiple patents. Yet, last year he admitted that he had finally "just" received his first patent -- admitting that he had lied originally.
Yet, now he professes to tell people that they can't comment unless they have a patent. Angry dude, you were doing exactly that prior to your own patent?
And, might I ask, why is it that you still refuse to identify your patent? Given your history of lying, I think it's reasonable for us to be skeptical that you actually have one.
As for the claim that no one can comment on this unless they have a patent, I would suggest the opposite is true. Once you have a patent, you are undeniably biased by the system. It has granted you an unnatural monopoly, and thus it makes sense that you'd want to hang onto it. However, you are no longer an objective commentator on the system since you benefit from it. You're the one who always screams "follow the money." So, by that very reasoning, you should be excluded from any debate about the patent system.
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Re: Re: Re: Re: Re: Stealing to Support Loss Leade
Dorpus is annoying but livable however AD is making me consider dropping this blog from my reading list, and I think that's his intention.
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Re: Re: Re: Re: Re: Re: Stealing to Support Loss L
Dorpus is annoying but livable however AD is making me consider dropping this blog from my reading list, and I think that's his intention.
I agree with that. He's been posting this crap since 2001. I think its high time for him to find another home.
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Re: Re: Re: Re: Re: Re: Re: Stealing to Support Lo
Voltaire
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Re: Re: Re: Re: Re: Re: Re: Re: Stealing to Suppor
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Re: Re: Re: Re: Re: Re: Stealing to Support Loss L
Unless people are spamming, we will not delete comments or ban individuals. I don't feel it's appropriate, even for folks as amusing as angry dude (just take him as a comic interlude).
However, we are working on something that we'll be releasing in the near future that hopefully will make the overall commenting experience better... stay tuned.
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Who knows more about Harware and Software Design?
“Ronald, very simple question: have you ever written a line of software code?”
. a) Far more than you can imagine.
“Do you honestly believe that the USPTO is the sole arbiter of whether or not software is legitimate?”
. b) Mike, wrong question based on ignorance of the patent system. The USPTO is the arbiter of weather a software invention merits a patent.
Even if they are inventing they are not teaching others the invention and therefore have chosen to keep their work essentially secret, much as guilds used to jealously guard the secrets of their trade to exclude others from practicing the inventions. In many ways they are treating their knowledge as a trade secret.
You clearly have no clue how software works. I'm going to make a suggestion for your own good: you probably should keep your comments directed at non-software patents. You have enough trouble there. Once you touch on software, you show your complete ignorance very quickly.
. c) Mike, I bet I know far more about software that you do.
Denying inventors’ protection via patents is sure to lead to the same problems which society had when guilds kept knowledge secret.
Funny. You recognize that software patents are a recent thing? And prior to software patents, the software industry thrived? Yeah, funny how that worked...
. d) Yet the industry has thrived even more with patents.
Software, by its nature, is not a "trade secret."
. e) If you do not teach in detail then it is being used as a trade secret. I suggest that all of you get busy teaching exactly what you believe should be excluded from patent protection.
Now lets address the issue of programming and what I know about it.
Actually I started programming in seventh grade in the early nineteen-sixties on a GE timeshare system at what was then GMI and today is Kettering. The first language I learned was Algol. A year or two later I learned Fortran. Farily early in my professional career I was at the leading edge of applying microcomputers in industrial environments. In the 6800-6500 computing days I designed systems using multiple CPU's which shared memory map segments on alternate phases of the clock. In other words multi-core computing with no wait states! This was desirable because of problems with interrupt latency on real time systems.
In those days there were mainframe programmers who mostly stuck their noses up and refused to touch a microprocessor based system. So while I was an EE coming at the issues from the hardware side of things the reality was if you designed a microcomputer system you had to write your own code.
I have worked in scores of computer languages from raw binary in the early days, then assembler to high level. I probably worked with hundreds of dialects. And I mastered programmable logic controllers (used in automation), CNC and much more.
So I do understand both hardware and software, probably better then most people. Today the great majority of programmers are woefully ignorant of hardware, and because of this they are not equipped to understand the issues.
Read my lips, hardware and software solutions are often interchangeable. Inventions can be implemented with either approach. There is no rational reason that a hardware solution should be patentable while a software solution was not patentable. It would be economic suicide for America to give away all of the software related inventions so that a few very loud louts who claim that they are inventors while there is no proof that they ever invented anything. If you want to claim that you are an inventor then you must subject yourself to the peer review system which we call a patent. No patent equals no standing as an inventor.
Ronald J. Riley,
Speaking only on my own behalf.
Affiliations:
President - www.PIAUSA.org - RJR at PIAUSA.org
Executive Director - www.InventorEd.org - RJR at InvEd.org
Senior Fellow - www.patentPolicy.org
President - Alliance for American Innovation
Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
Washington, DC
Direct (202) 318-1595 - 9 am to 9 pm EST.
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Re: Who knows more about Harware and Software Desi
I noted, with interest, that you failed to answer this question:
"Ronald, simple question: if you run a pizza shop, and another pizza shop opens up down the street, have they stolen from you or are they just competing?"
I also note, with interest, that you failed to respond to this:
"I'm curious if you've noticed the large economic impact thanks to open source software. You do realize that the internet itself is built on open source software. And nearly every successful internet company is built on open source software. Are you suggesting that we would be better off as a society without all of that?"
I wonder why.
“Do you honestly believe that the USPTO is the sole arbiter of whether or not software is legitimate?”
. b) Mike, wrong question based on ignorance of the patent system. The USPTO is the arbiter of weather a software invention merits a patent.
Wrong question? I merely responded to your point, which was (and I quote directly): "Many claim their work is inventive but this is questionable and in the absence of having their work judged via the patent process they simply cannot make a credible case that they have done anything more than copy other's inventions by coding a solution in a marginally different way."
That's saying something quite different than that the USPTO is merely the arbiter of what becomes a patent. You are saying that anyone who creates software without a patent is most likely copying other's work. That's quite a claim.
It looks even worse when you consider how many mistakes the USPTO makes... or did you miss those recent statistics, showing that in a large majority of re-exam cases, the USPTO has admitted that it made a mistake in originally granting the patent, and later needed to reject it entirely or reject many of the claims? But, in your book, all patents are valid and the USPTO is perfect. The evidence suggests otherwise.
How do you explain the USPTO's own admittance that it gets things wrong so often?
Funny. You recognize that software patents are a recent thing? And prior to software patents, the software industry thrived? Yeah, funny how that worked...
. d) Yet the industry has thrived even more with patents.
Ronald, first of all, that's not true. The software industry's thriving nature has little to do with patents -- most software growth has been in areas without patents than with...
But, even granting your incorrect premise that software has thrived thanks to patents, that's entirely beside the point. The point was that you said (and again, I quote directly): "Denying inventors’ protection via patents is sure to lead to the same problems which society had when guilds kept knowledge secret."
You were saying that it would not thrive without patents. I pointed out that you did. Yet, now you say that it thrives "more" with patents. That's in direct contradiction with your earlier statement.
I'll lay it out for you in a direct line:
Ronald: Without software patents, things would be kept secret and there would be problems.
Mike: But before software patents there was no evidence that was true. In fact, the software industry thrived.
Ronald: But it thrived more with software patents.
Do you not see the logical fallacy? You said that software could not thrive without patents, I pointed out that it did, and then you agreed.
. e) If you do not teach in detail then it is being used as a trade secret. I suggest that all of you get busy teaching exactly what you believe should be excluded from patent protection.
You have a funny notion of trade secrets.
By the way, if you honestly believe that not getting a patent is the equivalent of hoarding the information, then you must support getting rid of any and all patents that do not also include source code, yes? Or do I misunderstand you? After all, without the source code, how can you "teach in detail" what the software is doing?
Read my lips, hardware and software solutions are often interchangeable.
This is a favorite line of folks like yourself, but it's not true when it comes to the differences in patents. Remember, patents are for the implementation of the idea, not the idea itself. Yet, when it comes to software patents, no source code is presented. It is merely the "idea" that is what is being patented.
There is no rational reason that a hardware solution should be patentable while a software solution was not patentable
Actually, there are many rational reasons, including the fact that software is already covered by copyright and that many software algorithms are really no different than language or math -- and you cannot patent either language or math.
It would be economic suicide for America to give away all of the software related inventions so that a few very loud louts who claim that they are inventors while there is no proof that they ever invented anything.
A statement claiming "economic suicide" would require some evidence for a variety of reasons:
1. The software industry thrived perfectly fine without patents.
2. Much of the software industry's growth over the past decade has been due to open source software, which eschews patents.
3. Research by many different economists (including our recent Nobel Prize winner) has shown no economic benefit to software patents.
4. Europe does not recognize software patents, yet has a software industry (and its economy seems to be doing better than the US these days).
Would you care to explain these points?
If you want to claim that you are an inventor then you must subject yourself to the peer review system which we call a patent. No patent equals no standing as an inventor.
It's nice, Ronald, that the folks who write the dictionary let you determine what qualifies as an "inventor" or not, but I don't see that they've added your definition to the book just yet.
To be an inventor, you just need to invent something. There is no requirement to patent it. Until such law makes such a requirement, I'm afraid your definition is incorrect.
In the meantime, I will also note that the Constitutional clause that begat the patent system was not designed to "protect inventors" but to "promote the progress." You have yet to show how progress is promoted by patents.
I'm sure that will be supplied in your next comment?
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Who knows more about Harware and Software Design?
“Ronald, very simple question: have you ever written a line of software code?”
. a) Far more than you can imagine.
“Do you honestly believe that the USPTO is the sole arbiter of whether or not software is legitimate?”
. b) Mike, wrong question based on ignorance of the patent system. The USPTO is the arbiter of weather a software invention merits a patent.
Even if they are inventing they are not teaching others the invention and therefore have chosen to keep their work essentially secret, much as guilds used to jealously guard the secrets of their trade to exclude others from practicing the inventions. In many ways they are treating their knowledge as a trade secret.
You clearly have no clue how software works. I'm going to make a suggestion for your own good: you probably should keep your comments directed at non-software patents. You have enough trouble there. Once you touch on software, you show your complete ignorance very quickly.
. c) Mike, I bet I know far more about software that you do.
Denying inventors’ protection via patents is sure to lead to the same problems which society had when guilds kept knowledge secret.
Funny. You recognize that software patents are a recent thing? And prior to software patents, the software industry thrived? Yeah, funny how that worked...
. d) Yet the industry has thrived even more with patents.
Software, by its nature, is not a "trade secret."
. e) If you do not teach in detail then it is being used as a trade secret. I suggest that all of you get busy teaching exactly what you believe should be excluded from patent protection.
Now lets address the issue of programming and what I know about it.
Actually I started programming in seventh grade in the early nineteen-sixties on a GE timeshare system at what was then GMI and today is Kettering. The first language I learned was Algol. A year or two later I learned Fortran. Farily early in my professional career I was at the leading edge of applying microcomputers in industrial environments. In the 6800-6500 computing days I designed systems using multiple CPU's which shared memory map segments on alternate phases of the clock. In other words multi-core computing with no wait states! This was desirable because of problems with interrupt latency on real time systems.
In those days there were mainframe programmers who mostly stuck their noses up and refused to touch a microprocessor based system. So while I was an EE coming at the issues from the hardware side of things the reality was if you designed a microcomputer system you had to write your own code.
I have worked in scores of computer languages from raw binary in the early days, then assembler to high level. I probably worked with hundreds of dialects. And I mastered programmable logic controllers (used in automation), CNC and much more.
So I do understand both hardware and software, probably better then most people. Today the great majority of programmers are woefully ignorant of hardware, and because of this they are not equipped to understand the issues.
Read my lips, hardware and software solutions are often interchangeable. Inventions can be implemented with either approach. There is no rational reason that a hardware solution should be patentable while a software solution was not patentable. It would be economic suicide for America to give away all of the software related inventions so that a few very loud louts who claim that they are inventors while there is no proof that they ever invented anything. If you want to claim that you are an inventor then you must subject yourself to the peer review system which we call a patent. No patent equals no standing as an inventor.
Ronald J. Riley,
Speaking only on my own behalf.
Affiliations:
President - www.PIAUSA.org - RJR at PIAUSA.org
Executive Director - www.InventorEd.org - RJR at InvEd.org
Senior Fellow - www.patentPolicy.org
President - Alliance for American Innovation
Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
Washington, DC
Direct (202) 318-1595 - 9 am to 9 pm EST.
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Re: Who knows more about Harware and Software Desi
you are wasting your time on Mike and the rest of his lemmings
For one thing, they are technically ignorant
Typical of a new generation though
No understanding of things like Turing equivalence, hardware vs. software etc.
Just a bunch of buzzword skills the day: J2EE, .NET, C#, AJAX, Ruby on Rails etc. etc. etc.
Can't do anything without some library or toolkit
They also know nothing about the breakthrough algorithmic inventions like RSA encryption included in software packages and protocols like SSH or SSL they are using every day
Complete mental retardation if you ask me
(heck, I actually write code every day and have to interact with younger folks. So I know what I'm talking about)
Just my last 2 cents before I go out...
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Re: Re: Who knows more about Harware and Software
Make sure you clean that sand from your vagina, dudette.
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Re: Who knows more about Harware and Software Desi
1) You offer no evidence or support to back up your claims.
2) You write most prolificly when extolling about your depth & breadth of experience.
Basically, you're a blowhard with a superiority complex.
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Redhat support is not a business model.... it comp
Redhat support is USELESS. If you have a PEBKAC error they might help but then you're just being a tool... and deserve to be taxed--like marks at a carnival. If there is a real issue, with say... the kernel, or a block device driver... where it exhibits signs of having been written by lemmings...
not only is redhat support useless, they are expensive. It is faster to contact the code maintainer directly, having IDed the error, than it is to deal with a tribe of support personel, that don't understand English let alone, what you mean by UUID or Logical Volume Name....
It takes weeks to get a bug fix pushed thru Redhat's bureaucratic support organization. Or you could just mail a patch or a precise bug description directly to the maintainer... cost $0... response ( if you are not a clueless lemming) is often immediate.
So, the reason that Redhat is making money off its support is exactly as the first poster suggested.. it is to give ignorant corporations pro forma liability insurance from their ignorant share holders... it is a big waste of time and money, that actually hurts the bottom line of ignorant companies...and their ignorant shareholders....
Approached differently, the Redhat business model, unlike this article suggests, add no value to the OSS product. It may temporarily assure some developers ( who do add value) of a constant revenue stream. But it also suports numerous useless hangers on, who simply impede the development process, and distract from the goal of creating a useful, reliable, secure product.
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Ronald Riley is Avoiding the Real Problem.
I am not quite as old as you are, and consequently, my programming experience does not go quite so far back, a mere thirty years or so, off and on. Briefly, my experience is: Victor Comptometer 4800 programmable calculator, TI-58 programmable calculator, IBM 1130, mainframe (System 370), and personal computers, of course. Languages: Fortran (Fortran II and WATFIV), PL/I, some SIMSCRIPT, and C, of course. Basic as well, on the personal computer, but that's really just an version of Fortran. Also, a little S/370 assembler, and rather more Intel 8088 assembler. I've learned a bit of computer science on the side, but I was trained as a mechanical engineer (Engineering Science). I have never filed a patent; however, in 1985-86, I did a piece of work which I thought at the time was purely theoretical in character, and published it in a linguistics journal. I was working in the tradition of Noam Chomsky, under the supervision of a leading member of the neo-Chomsky-ian community, building algorithms which were potentially powerful tools and models of the human brain at the same time. Several years later, someone else patented the same mechanism. The patentee got very upset when I eventually pointed out the similarities to him. So much for the patent office's vaunted examination requirements. I don't know whether you would count that as experience of invention or not. I realize, rationally, that you, personally, were not the patent attorney involved, but at the same time, this does effect my views.
For the last twenty years, the computer industry has been in a state of incipient decline-- not actual decline, but incipient decline. Total dollar volume has been kept up by more people getting computers, but for twenty years, there has been a softness in demand at the top of the market, among the kinds of users who pioneer the way for other users. My own personal maximum expenditure on a computer was in the year 1989. In the year 1985, it was self-evident that one would like to have a $50,000 desktop computer-- then called a workstation-- even if it was equally self-evident that one could not afford anything like that. One actually settled for something less-- say a $2000 computer. By contrast, in the year 2008, it is very difficult to make a credible case why one should buy a $1000 desktop computer instead of a $300 desktop computer (*). Microsoft tried to force the issue, by designing Windows Vista to effectively require a $1000 computer, but the gambit backfired, people tried to run Vista on $300 computers, and Vista got a reputation as a lemon. Some years back, I found that Windows 3.1 ran effectively on a computer about ten times as powerful as the one it came bundled with. The "overbuilding" of Windows is not something new-- it is just that this time, it backfired.
(*) Laptops don't count, because a $2000 laptop is effectively a $200 computer buried inside of $1800 worth of portability. You are not paying for number-crunching ability, but for the expensive screen, etc.
This state of incipient decline has implications in software. If you look at Red Hat Linux, you will find that it has very few features which were not available in super-high-end software for workstations or dedicated mainframes by 1988. By that date, people were using stuff like CAD/CAM in selected places, in selected companies which represented the best practices. The big transition is that such software has gone from being custom-produced, and extremely expensive, to being mass-distributed. The $300 computer of 2008 is roughly equal in performance to a high-end Amdahl mainframe of 1985, with the graphics adapter being comparable to a Cray, and a comparable machine can support software of roughly equal sophistication. Circa 1990, Microsoft was cloning was cloning practically everyone in sight (Apple, Lotus, Borland/WordPerfect), and it was working to break IBM's dominance of personal computer hardware architecture (remember the Micro Channel Architecture bus episode?). Microsoft got sued a couple of times (on the dubious basis of "visual copyright" rather than on patents), but the lawsuits came to nothing in the end.
This period of incipient decline is of course the period in which patents have been granted for software, but I think patents are a result, rather than a cause of the decline. Filing for a patent is in the last analysis an unproductive act, an act of blowing time and money on lawyers rather than getting more engineering work done. People who are actually engaged in productive work start to chase patents when they reach a certain level of collective anxiety, when the industry is closing down around them. The basic problem is just the law of diminishing returns. The most urgent stuff gets done first, and what gets left to a later time is less urgent. WordStar 3 really was a big change from a typewriter. The latest new version of Microsoft Word is much less compelling. I know at least one person who persistently refuses to stop using WordStar 3, because the benefits of the change do not seem to outweigh the difficulties. I do not go quite that far, myself, but my current word processor has a good many features which I have not troubled to learn to use. On my Windows machine, I am still using meaningful quantities of old MS-DOS software, with file dates ranging from 1988-1992. By 1992, there were DOS word processors which had all the features necessary for scholarly and literary writing, and which were "Windows aware," meaning that they could use the mouse and access the Windows clipboard. Most of the equivalent applications on the Linux machine are simply not a quantum leap above the old MS-DOS applications.
Imagine that IBM had responded to anti-trust complaints, circa 1980, by open-sourcing, rather than by unbundling, its actual response. Let us imagine further, that the Pentagon had chosen at an early date to subsidize hard-core open-source, ie. people like Richard Stallman, and licenses like the GPL. If we had been using open-source software all the time, we would be able to point to particular files and ranges of lines of code which had gone unchanged for twenty years, and detailed documentation (ie. bug reports) explaining such changes as had taken place, and most patent claims would be comparatively easy to defend against. Of course what actually happened was that everything got cloned a couple of times before open-source emerged. Significant sections of open-source software are beginning to reach this point of historical transparency, and there will be more every year.
If you could come up with credible applications for a $2000 computer, it would be more or less inevitable that the code would be buggy for the first ten years or so, and you could happily go along selling upgrades, just the way they did back in the 1980's. You would presumably be able to file good patents, but that would not much matter. The same thing which applies to software applies to electronics in general. For example, there is a lot of industry "buzz" about transmitting broadcast television over the internet. Akamai and Cisco are arguing about who owns the "buzz." However, television over the internet is very unlikely to be transformative in the sense that the VCR was transformative. A VCR meant that you could record a program, and treat it more or less like a book. Devices like TIVO's have not really extended on this, but they have merely tried to limit it with Digital Rights Management. An extraordinary number of people are filing patents for DRM, which is basically stupid, because DRM does not create value for the customer, and the customer is paying the tab.
You are blaming open-source for your real problem, which is that you cannot come up with credible new applications which would persuade large numbers of people to spend large sums of money. The active development in software is going into things like videogames, and those are necessarily a rather limited market.So tell me, why should I buy a $2000 desktop computer?
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Infinite goods + overpriced services = NO FREE GOO
Red Hat took code someone else developed, tweaked it, and gave it away for free. The tweaking of the software meant there would be a need for the service Red Hat sells in order to make their free version work. Various searches online will attest to the issues of Red Hat.
That being said, this business model isn't going to convince me (or any other intelligent person) that infinite goods are free.
We're going to pay for "free" one way or another.
In fact, what Techdirt does and what Red Hat does are identical: They take what others do, give it away for free, but charge for services (usually marked up).
Now consumers need to worry about over-inflated external "pricing" for so called "free" items.
This is commonplace throughout the industry, whether it be online or in the real world. Offers by industry to "buy one, get one free" translates into "I wonder what they marked up to give us this offer".
Most consumers know this, despite being ignorant about business economics. You'll never convince consumers you're giving away something for free, because their parents taught them a driving principle "If it's too good to be true.."
Finally, I'll close with this. Want to know what the definition of FREE is? Take a look at the original software Red Hat's giving away. As far as I know, Linus Torvalds hasn't asked for a dime for his work.
If he had done so as a business, you can bet that Linux wouldn't be free.
NOTE: I've noticed how real world business tend to migrate to Linux to shave operating costs (both server and hardware) but these savings never make it to consumers. Anyone here care to explain that one to me? Rhetorical question, obviously.
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Re: Infinite goods + overpriced services = NO FREE
Now, if it's true that the software they service is not noticably different from some other free software except in that it's buggy and *requires* service calls, then they will lose business to the non-buggy code. (The trouble of course is there's no such thing as non-buggy code; RedHat's competitors are going to have driver issues and hardware problems too, but they WON'T have the support service to call when you need it.) Even granting that, though, it just means that RedHat HAS to offer something their competitors don't: that they're making millions of dollars is testament that they've got SOMETHING going on.
Suppose I'm selling hotdogs plain for $4.00, but if you want relish and mustard it's $4.00. Did you pay for the relish and mustard?
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Re: Re: Infinite goods + overpriced services = NO
The software is free because the designer made it free. Red Hat isn't giving anything away for free THEY own.
EVERYTHING has a cost, whether the bloggers at Techdirt want to admit it or not. In the case of your example of mustard and relish, why in the world do you think the hotdog costs $4?
The $4 pays for the mustard, napkins, etc. because it doesn't cost them $4 per hotdog. What's a package go for now? $2.99?
That's why I said Red Hat's example wasn't a good one, but more imporantly, it's why many online venues don't give away anything for "free" without something attached, whether directly (required software for use) or indirectly (ads, services, etc.).
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Re: Infinite goods + overpriced services = NO FREE
I'm sorry, but how does Techdirt do that?
And considering that most people who use either Techdirt's services or Red Hat's don't pay a dime, I'd say for most users, it very much is free.
Now consumers need to worry about over-inflated external "pricing" for so called "free" items.
Can you explain what we inflate? Can you explain what Red Hat inflates? You just admitted what they were giving away wasn't their's in the first place, so it's hard to see how they inflated anything.
This is commonplace throughout the industry, whether it be online or in the real world. Offers by industry to "buy one, get one free" translates into "I wonder what they marked up to give us this offer".
That's true in a world of scarce goods, where the "free" cost needs to be covered. But with infinite goods, the marginal cost of each new good is zero, and thus no cost needs to be covered.
Finally, I'll close with this. Want to know what the definition of FREE is? Take a look at the original software Red Hat's giving away. As far as I know, Linus Torvalds hasn't asked for a dime for his work.
But he's used his fame and name recognition to get high paying jobs.
NOTE: I've noticed how real world business tend to migrate to Linux to shave operating costs (both server and hardware) but these savings never make it to consumers. Anyone here care to explain that one to me? Rhetorical question, obviously.
Not a rhetorical question at all, but not a particularly accurate one. You don't think the savings have been passed on to consumers? Then you apparently haven't paid much attention to the computing industry. You notice that wonderful Google service you like to use? That's free in large part BECAUSE of Linux. The number of free online services that are in existence just because of Linux is huge.
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Red Hat And The Power Of Infinite Goods
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