Is Canonical overly paternalistic with Ubuntu?
On Monday, I noted that Ubuntu's revenue is rising significantly, and that this success is beginning to cut into Microsoft's OEM licensing business.
Tuesday there is a chorus of voices calling out that Canonical is not cash-flow positive, with CNET reporting that profits are years away.
Is this cause of optimism or concern?
On the positive side, CEO Mark Shuttleworth is able to run Canonical toward mass adoption, not mass monetization. This means he can avoid trade-offs that might help the Canonical business but hurt the Ubuntu Linux distribution.
On the negative side, it is profit and the thirst for it that tends to separate great companies from paltry ones. Yes, the quest for revenue and profit can turn good companies into shady ones--witness Microsoft's unlawful exercise of monopoly power for many years--but on balance the quest for profitability and self-sustainability tends to force companies to be pragmatic and build to suit near-term needs, not long-term aspirations.
I personally believe Canonical would be the better for taking a hard-headed approach to the business side of Ubuntu, and the sooner the better. Shuttleworth, of course, has this in mind with his push for cloud services to generate revenue around Ubuntu, rather than directly from Ubuntu.
But he needs to hurry before his organization grows lazy in the expectation that "Mark will provide." Canonical should start funding itself, rather than relying on Shuttleworth. It will be a better organization as it seeks self-sufficiency. Talking to Shuttleworth, it's clear that he can handle the business aspect of Canonical in spades. He just needs to start doing so.
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. You can follow Matt on Twitter @mjasay. 
Nonetheless, I'm completely aware I could be getting this all wrong.
- by gerrygadget October 29, 2008 12:35 PM PDT
- My response is that a) it's his company and his money - if he fails it's all on him, but if he succeeds he gets the credit - it's what entrepreneurship is all about, b) he's reassuring developers not part of his company that there will continue to be funding and direction for the long term, c) he can still pursue growth without profit much like Amazon did under Jeff Bezos' direction (though he's pursuing a single much smaller market, IMO) and develop an "institution" that provides a gaurantee to paying customers that the company will remain in business and is not at risk of folding, and d) it allows him to experiment with things like the cloud and do longer-term planning than most short-sighted quarter-by-quarter wall-street-scrutinized companies - it allows him (and the company) to do the right thing and not be distracted. Bezos prescribed and demanded growth for Amazon, but rejected calls for profit. I think it's reasonable to say that the intensity of Bezos' demands grew over the years as the company found it's stride and vision. Canonical is still in the early years, IMO, and the company and Mark will solidify their vision over time and eventually cross over into profitability, but it's certainly too early for a company like this to focus on profits. Red Hat has done well with the open-source model, but it's taken a while for them to grow to the size they are and figure out what works and what doesn't, and they've been around a lot longer than Canonical. Let Canonical mature and find it's own way.
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