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(?) The Answer Guy (!)

By James T. Dennis, tag@lists.linuxgazette.net
LinuxCare, http://www.linuxcare.com/

(?) Out of the Blue Strategic Advice for Red Hat

From dennis garber on Tue, 11 Jan 2000

In order for redhat to succeed, they must do 4 things.

  1. Buy www.phatlinux.com's distrubution. Offer it as an alternative to yours
  2. Buy www.trelos.com 's version vmware.com
  3. Buy the technology of the lothar project. Which allows windows plug and play devices to work under linux.
  4. Get some focus groups together to see if the information in the documentation is getting accross to non programmers.

(!) I have no idea where this advice comes from.
Are you a share holder or investor in PhatLinux, Trelos Lothar, etc?
Of course this raises the question: "succeed at what?"
I presume you mean something like: "for them to justify their valuation by reporting profits on a scale to match the earnings to capitalization ratio of traditional companies."
Since I'm not a shareholder of Red Hat my initial gut reaction is: "who cares?"
If I was a Red Hat shareholder I wouldn't ever expect them to report profits or earning in line with their market cap. It's a speculative holding, bought by people who believe that its "buzz" will keep other investors interested. That's basically like Yahoo! and other high flying Internet stocks.
It appears to me that the stock market's absurd gains in the last decade amount to a simple fact of the current prosperity and concentration of wealth in our economy: "There's no where else to stash it."
It is generally accepted that putting money into banks for a paltry 3% to 5% return is a way to slowly LOSE your money due to inflation and taxation. Other forms of investment such as real estate and the bond market are driven more by inflation. When we have low inflation those investments won't "perform" well.
Meanwhile the poor are getting poorer, the middle class are working hard and spending more, and the rich are getting richer. The hard working middle class have put money (or had it deducted) into pension plans.
So we have billions of dollars (the holdings of the pension plans, and those of the rich individuals and corporations) which have to "go somewhere." There's incredible social and economic pressure for that money to be "working."
Since the U.S. economy is the strongest in the world and the North American continent is one of the most politically stable there is little incentive to invest overseas. So most of the money will stay on our stock markets.
(This is not to say that we are the "good guys." From what I've read of Chomsky, Uncle Sam stirs up much of this international trouble. We later don our white hat and make a great show of our heroic efforts to make peace. To read more on that topic visit the "The Noam Chomsky Archive" http://www.lbbs.org/chomsky/index.cfm and consider getting and reading a copy of "Deterring Democracy" in particular).
As for Red Hat I don't know that PhatLinux is such a critical aquisition for them. There have been several "FAT Linux" distributions (running under a subdirectory on an MS-DOS/MS Windows filesystem) over the years. There is a Macmillan product known as something like: "Linux for Windows" (which might be a re-packaging of PhatLinux for all I know). You can find info about it at http://www.macmillansoftware.com/mac_software if you're willing to put up with the JavaScript that they force all over their page. It's basically unusable in Lynx and I don't feel inclined to fire up X to look at it (since I'm writing this through an ssh link about three U.S. states from my home mailbox).
So, Red Hat could create a "no-repartition" Linux product. They could buy a company that's done it (build or buy --- it's the recurring question for every business' software strategy).
I have no experience with PhatLinux (http://www.phatlinux.com) so I can't offer an opinion on the technical merits for this suggestion. They (Red Hat) would presumably want their own analysts to make that decision.
TreLOS' "Win4Lin" (http://www.trelos.com) clone of VMWare (http://www.vmware.com) might be an interesting aquisition. Of course, with Red Hat's market capitization they could court VMWare directly.
I've never used either of these products personally. Most of my associates at Linuxcare (www.Linuxcare.com) use VMWare when they need to access "legacy" MS Windows apps (and even when they want to run a copy of Linux under a virtual machine).
Again, I can't speak to the technical merits of such an aquisition.
There's also Kevin Lawton's Freemware (http://www.freemware.org) is an open source project to implement something like Win4Lin and VMWare. Kevin Lawton wrote the Bochs package which is a shareware virtual machine (that implements an x86 on any UNIX platform).
Meanwhile let's not forget the WINE project http://www.winehq.com which is continuing to plug away at running MS Windows programs under Linux (in this case without need for an emulator or hardware virtualization layer).
So, Red Hat (or other Linux companies) have a smorgasbord of MS-Windows binary compatability technologies to choose from.
Lothar (http://www.linux-mandrake.com/lothar) is a project that is being spear-headed by MandrakeSoft, a competitor to Red Hat. In addition it basically overlaps some of the functionality that Red Hat hopes to implement in Linuxconf (a package in which they've already invested some effort and support). However, Lothar does seem to be an open source project --- so any contribution by Red Hat could benefit them (and everyone ele). It looks like Lothar is focused primarily on the administration and configuration of hardware. Basically let's provide a good UI for "adding hardware" (one that's better and more robust than Win '9x's infamous "Adding Hardware" wizard).
Your last suggestion makes more sense than any of the others. Of course one should be careful with "focus goups." If the methods used in selecting participants and conducting the research aren't exceptionally good, then you just end up drawing conclusion from the exercise that match assumptions that you fed into it.
All of your suggestions do have a consistent theme. They all relate to the growth of Linux on the PC desktop.
It seems that Red Hat doesn't consider that to be a strategic priority. I can understand their point of view there. They are trying to "break into" lucrative niches "where the money is." That is suggested by their aquisition of Cygnus.
Linux on the desktop will probably happen. Red Hat will probably help. However, the migration away from MS Windows on home and client systems will be primarily driven by users and free programmers (including Red Hat developers in their "free" time).
Meanwhile, Red Hat has "bigger fish to fry" (or so they hope).
As to which breeds of fish they're cooking, I wouldn't know. Unfortunately for them Red Hat seems to lack focus. They claim to want to build up their services --- yet they still lack credibility in their support and professional services offerings.
Their bread and butter has been shrink wrap --- and they are getting nailed by Macmillan's Mandrake based packages (which have a well-established retail channel through their ties to book stores).
Their purchase of Cygnus would suggest a diversification into tool chain and embedded systems (the strengths of that company).
Their announced strategic relationships with Oracle et al suggest a focus on the IT server room --- the old NT killer.
I personally see these as different directions. None of them point to Joe consumer and the desktop.
Their support of GNOME can be seen as a desktop oriented initiative. However, it seems that the public, even the IT purchasing public suffers from the delusion that servers need GUIs. So I'm not sure that this is a compelling argument.
Anyway I think that Red Hat does hope to "cash in on" the name recognition that they've built. They don't seem to think that retail sales of their distribution will sustain reasonable growth for them. They're right!
The Linux market is overly "distribution"-manic. There is relatively little difference among distributions. Red Hat, S.u.S.E., Caldera, TurboLinux, Debian, Corel and Stormix are all fundamentally the same software.

[ With different installers, each having their own idea of glitz. Actually, the packaging system is a slight delimiter -- .rpm vs .deb -- but with the help of a small package called alien, even that can generally be overcome quickly. -- Heather ]

With an effective LSB (*) we wouldn't even have to ask "what distribution is that for/from?" You could simply install, configure and manage any package from the open source world without worrying about the details.
I think Red Hat realizes the truth in this and is frantically seeking other revenue streams. The sad think is that the shrink-wrapped/packaging business is not such a bad one to be in. It did, after all, get them where they are today.

Copyright © 2000, James T. Dennis
Published in The Linux Gazette Issue 50 February 2000
HTML transformation by Heather Stern of Starshine Technical Services, http://www.starshine.org/

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