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October 2, 2008 8:16 AM PDT

Is the end near for independent open source?

by Matt Asay

For the first time I'm scared for open source. Not open source as a global movement and way of doing business and software development - that's safe. Even Microsoft believes in it.

No, I worry for Red Hat. As I wrote the other day, if Red Hat's stock continues to tumble it becomes ripe for an Oracle acquisition. Red Hat has been doing exceptionally well selling into a down market, growing quarter after quarter.

But Wall Street doesn't seem to care. To help telegraph its own confidence in its future, Red Hat has now initiated a $125 million share buyback to hold up its share price.

Let's hope it works. Losing Red Hat as an independent open-source vendor would effectively call an end to open source as a standalone software strategy. Some may cheer at this prospect, but I think the software world would be poorer for having open source serve as a minor component in everyone's arsenal, rather than having Red Hat showcase that it's a viable business strategy on its own.

Customers would also be poorer, as The VAR Guy notes. We need an independent Red Hat. We need the market to recognize that open-source Red Hat promises to deliver more value for lower cost in a recessionary market. Customers appreciate that fact and will buy into it. When will Wall Street recognize what customers already know?

Matt Asay brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is vice president of business development at Alfresco, a company that develops open-source software for content management. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure.
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by fazalmajid October 2, 2008 10:51 AM PDT
Red Hat does not deliver value in a recessionary environment - Linux does. RHEL is the most expensive server OS platform, even more so than Windows, with sub-par support to show for it. If Red Hat goes under, people will switch to CentOS. Big deal.
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by heathhey October 2, 2008 11:09 AM PDT
Well, the problem is that CentOS wouldn't exist without Red Hat. Red Hat does all the engineering work to make RHEL. The CentOS folks just take the source, remove trademarks and build their distro. This is why its important for Red Hat to succeed. Red Hat is one of the largest contributers to Open Source software. Even Ubuntu and other distros benefit from work done by Red Hat. Red Hat is also one of the largest commercial contributers to the Linux kernel (http://www.linuxfoundation.org/publications/linuxkerneldevelopment.php). While its true that if Red Hat went away Open Source software would continue to survive, it would still be a large setback.
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by Matt Asay October 2, 2008 2:25 PM PDT
I agree with heathhey. No Red Hat, and Linux would take a big hit. Beyond just the engineering work, Red Hat has done more than any company or anyone to make Linux a safe, responsible bet for CIOs.
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by The_Decider October 2, 2008 3:05 PM PDT
I don't feel sorry for RedHat. Don't want to lose your company? Don't sell out to sightsighted greedy morons(aka Wall Street and VC's) that have no problem destroying your work to make a quick buck. This is the inevitable result of selling out.
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by PACSferret October 3, 2008 12:24 AM PDT
Red Hat isn't going away - even if they are acquired they won't quit contributing to the kernel (unless they're acquired by MS, of course :-) . Open source is a great model for getting a company to a certain size, and maybe RH has even stretched beyond that, but I suggest there IS an upper ceiling, so M&A maybe the only way to continue to grow. The question then is whether it is necessarily acquisition by a larger, proprietary-to-some-extent org or some way of convolving with other open source company(s). Pity MySQL has been snaffled - that would have been an interesting combination.
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by penguiniator October 3, 2008 12:53 AM PDT
There's been noise lately about HP creating their own Linux-based OS. Maybe they'd like to acquire Red Hat and save some development time.
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by Squichie October 3, 2008 1:24 AM PDT
That is definitely a interesting take on HP.

Red Hat is definitely thrown around more than HP-UX...

But would HP be a good company to own redhat? I wouldnt mind seeing IBM take over red had, seeing that IBM is serious about opensource
by The_Decider October 3, 2008 8:28 AM PDT
I think HP would be a good fit. They are looking to move away from MS where they can, and this would give them a good jump on it.
by snaidamast October 3, 2008 6:22 AM PDT
If losing Red Hat as an independent vendor of open-source software infers that such a business model is doomed, than it wasn't much to begin with if it relies on one flagship company alone.

From what I have seen of the open-source movement to date, there are some very fine pieces of software out there. However, most open-source software is still poorly documented with a sense of not being finished products...
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About The Open Road

Matt Asay brings a decade of in-the-trenches open-source business and legal experience to the Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is general manager of the Americas division and vice president of business development at Alfresco, a company that develops open-source software for content management. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure.

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