Red Hat at the crossroads

As the biggest open source company in the world, Red Hat stands at a significant crossroads between its open source roots and significant growth in enterprise demand for its products, as underlined by changes made to its management, discontent within its user community and a sharp rise in profits.

By Richard Hillesley, 14 Jan 2008 at 16:08

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The challenge for Red Hat is to stay competitive in a market where, on the face of it, any company can replicate its software. But this is what makes open source an attractive proposition for many commercial users. Open source allows a more or less seamless transfer between hardware and software vendors, so the value has to come from elsewhere, from better hardware and better services, and staying ahead of the game, building loyalty to the brand. The price it has to pay to the developer communities that provide the software is to remain honest and true to those communities.

Vista reputedly cost upwards of $6 billion (£3 billion) to develop, and it has been estimated that the price tag to create the Linux kernel alone would be well over $600 million (£300 million). The key to the future success of Red Hat and other open source companies will be in staying true to the spirit of the user and developer communities from which they sprang, demanding acceptance of this model from corporate culture, rather than moulding themselves to the expectations of that culture.

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