Red Hat: JBoss growing twice as fast as Linux
Red Hat has been talking with The VAR Guy, and the news is positive for those of us who think that Red Hat's future lies beyond the operating system: Red Hat's JBoss business is growing twice as fast as its Linux business, and it delivers $10 in consulting fees for every $1 in subscription revenue.
This means that JBoss is much more interesting to Red Hat's channel than Red Hat Enterprise Linux is. It also means that JBoss should be the foundation for Red Hat getting into the application business in earnest.
Red Hat told analysts last month that JBoss was growing "substantially faster" than its Linux business, but this is the first on-the-record indication I've seen of just how fast it's growing. It's a sign that Red Hat has both the temperament and ambition to succeed beyond Linux, which is great news for Red Hat partners and bad news for its competitors.
If you're a proprietary competitor that makes its money by selling overpriced maintenance contracts, how do you compete with CIOs' consistent top pick for value? Just to get Red Hat started, here are Goldman Sachs' estimates of how much revenue each of the big software vendors makes from maintenance:
(Credit:
Goldman Sachs)
Consider this a prop for target practice.
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. 
I talk to enterprise customers all the time and at least in my industry (financial), the adoption rate for JBoss is negligible. What's happening is in this tough economy IBM and Oracle are able to leverage their existing relationships and offer Websphere / Weblogic and consulting services as a packaged cost. After all the banks will continue to use their mainframes / Oracle servers ad infinitum.
As a result, most financial institutions have adopted Websphere or Weblogic as standard, and their Enterprise Architects are simply unwilling to take on JBoss. If their sourcing guys talk to RedHat, it's only to pressure IBM / Oracle to come up with a better deal.
I'm pretty sure the situation is the same in most enterprises outside of the financial industry. Maybe smaller companies are adopting JBoss more (for departmental servers, etc.) but even there from what I've seen they're adopting non-Java technologies more often (Ruby on Rails mostly, sometimes Microsoft .NET).
This is a NON story.
- by ian.waring January 9, 2009 11:58 AM PST
- I don't believe the Goldman Sachs graph showing Red Hat deriving only 46% of their revenue from maintenance. Even if they utilised all of their billable GPS staff 100%, and filled all their training courses to capacity, I reckon they'll still be 80%+ revenue from maintenance - if not higher. In the final analysis, a Red Hat or a JBoss subscription is almost pure maintenance revenue to Red Hat. Most of the consulting work out there doesn't flow into their P&L - mostly to third party resellers and SIs (or indeed executed by customer IT staff on their own bat for free - Red Hat's stuff mostly "just works").
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- by MSSlayer January 9, 2009 3:53 PM PST
- Actually it is not.
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(6 Comments)Most proprietary vendors charge 20% of their initial license fees for maintenance, and have an average 5 year maintenance time span - so the theory goes that the revenue derived every fiscal year from licenses is around the same amount for support. For open source, it's by definition virtually all support...
Ian W.
I would like to see your data that shows this study is incorrect.