Monday, June 20, 2005

Show Me The Money!

I just got through reading an interesting article on The Register titled "Robertson gives up Linspire CEO post." The article covers Robertson giving up the CEO position to concentrate on two other businesses he's started. What caught my eye was this fact tossed out about Linspire:
Robertson fought a long battle with Microsoft, which didn't like the name Lindows for a Linux product. Finally, Robertson agreed to drop the Lindows name from its software and change it to Linspire. In return, Microsoft dropped its legal action and gave the company $20m. Linspire earlier this year boasted only 350,000 users, half of whom paid for extra services.
Stop and consider this for a moment. Linspire, one of the more visible Linux distributors, claims 350,000 users, only half who have paid for extra services. Yet Robertson got a $20 million consolation prize from Microsoft. Microsoft paid pocket change to Linspire while it generated nearly $10 Billion (with a 'B') in revenues in just the latest quarter. After listening to the constant drumbeat from the F/OSS quarter for over 10 years about how bad Microsoft is, and how good Linux is (among other things), you have to ask yourself where's the reward, specifically the monetary reward?

It isn't with Novell. Novell purchased SuSE last year in order to expand into the Linux space. Since purchasing SuSE in 2004 there have been a number of high-profile exits by former SuSE and Novell executives. In the latest quarter Novell sold 19,000 copies of SuSE. Compare this to Redhat's 175,000. This doesn't mean Novell isn't making money. Far from it. Novell made $1.2 billion in sales in fiscal 2004 on - Netware. And Novell continues to make money on existing Netware contracts.

It isn't with Mandriva, formerly Mandrake. Mandriva/Mandrake emerged from bankruptcy protection in April 2004 with a plan to pay off its debts over the next 9 years. With what little cash it has it's purchased Lycoris (down to one employee due to failure to sell enough desktop systems) as well as Brazil's Conectiva (which is where the 'iva' comes from in the new name). Mandriva is another weak Linux company slowly fading away.

The only real company seeming to make mainstream money is Redhat, and I have my questions about its profitability. Redhat's sales are orders of magnitude lower than Microsoft's.

It doesn't matter how evil you think Microsoft is, or how awful Sun or Apple are. I strongly question the long-term financial viability of Linux companies in the marketplace. Linux needs real company support in order to survive, let alone thrive. Going to newsgroups and web FAQs is no way to support enterprise systems. I run Fedora Core at home because it's fun, it's just me, and the applications I run can also be hosted on Windows, the real operating system everyone uses. Microsoft isn't going away, and Windows will get better because it has to for it's customer's sake, not because Linux is a threat. Wishful and delusional thinking by rabid Linux supporters won't change that reality.

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