Canonical is not cash flow positive
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| Author | Content |
|---|---|
| garymax Oct 28, 2008 12:30 AM EDT |
Well...Shuttleworth has admitted that the Linux desktop is NOT where the money is. Yet he has funded the most widely used distro all by himself for some time now. The problem is that to Shuttleworth, the desktop is a loss leader in marketing terms. He seems to believe that the money will be made in services. This mitigates against his distribution. After all, many distros like Slackware depend upon the sale of their software in order to stay in existence. Mandriva does...Vector Linux does...Mepis does...many other smaller disros do. Truth is, Shuttleworth wants to seed his distro out there to make it ubiquitous THEN he wants to make money on services on the back end. But so far, this hasn't panned out. Meanwhile, smaller distributions are cash flow positive, and are delivering real value to their user base. Canonical, on the other hand, will take another three to five years to be profitable. Anyone see a problem with this? I believe this illustrates how the Linux ecosystem can have many distributions each delivering real value to their user base--and making a profit as well. Mark Shuttleworth is banking on a windfall after he has established himself. It looks as if they have already done that. Then why is the server side such a hard sell? I think the server side is a tougher sell for Canonical then they bargained for. |
| gus3 Oct 28, 2008 1:33 AM EDT |
Canonical may not be cash-flow positive, but it can help other companies be cash-flow positive. Unlike a certain company in Redmond, which does nothing to help its customers be cash-flow positive. |
| garymax Oct 28, 2008 1:41 AM EDT |
gus3 Maybe so but for how long? |
| gus3 Oct 28, 2008 1:45 AM EDT |
If Canonical ends up going under, some other entity will step up to fill the gap. If Canonical finds its way to profitability, good for them. |
| Scott_Ruecker Oct 28, 2008 2:55 AM EDT |
Mark Shuttleworth, if he has invested and protected his wealth (the current financial crisis not withstanding) fairly well, is worth roughly $500 million dollars or so. He could bankroll Canonical for its entire existence if he so chooses. For Canonical, Ubuntu is the greatest advertising campaign of all time. Has the money Mark spent made Canonical profitable as quickly as he would like? No. But the way he has built brand recognition through the Ubuntu distro is unprecedented. When people know what Ubuntu is, but don't know what Linux is, you know you have done well for yourself. Besides if Mark was really only interested in making money he could have surely found easier, faster and far more profitable ways of doing so. |
| gus3 Oct 28, 2008 4:16 AM EDT |
As I understand it, Mark Shuttleworth's primary intention has been "to give back to the community," and to do so he formed Canonical, which took a decent Linux distro (Debian), gave it a deep massage, and presented Ubuntu to the world. Will it be a profitable (cash-flow positive) investment? The only valid answer to that question, in any context whatsoever, is "Maybe." Anyone who says otherwise, is trying to sell you something. But what he has done for Linux in particular, and Free Software/Open Source in general, goes far beyond simple bottom-line numbers. He has shown how wrong the naysayers are, by producing a desktop-ready Linux-based system, that even my mother could install cleanly. And if the nattering nabobs are wrong on that, how much more do they get wrong about Linux? Yes, he wants his company to be profitable. Few CEO's don't. But in the long run, the ripple effect will make sure that the good he has done will profit much more than $500,000,000. |
| TxtEdMacs Oct 28, 2008 9:39 AM EDT |
garymax, [see this as all uncharacteristically serious, I hate it! No fun anywhere!] Ok, back to business: first, is Ubuntu server a superior product compared to RedHat/CentOS or Novell's SuSE server offerings? Or at least, does it offer advantages over the competition? I suspect the answers at best are maybe to no. However, let's assume for argument that Ubuntu server is significantly better. In the corporate environment that gets you nowhere if that's the limit of the value you can cite. You cannot imagine how really conservative the decision process is. Not only do you have the engineering side following these inherently sensible credos: KISS [Keep It Simple Stupid] and If it's not broken don't fix it! You have other factors where many times the cost [currency] plays little role. Regarding the latter, even Windows if desired or used, despite its being a known pain, if they are setups to mitigate most problems it stays. What can kill good products [which I have seen happen] is the perception the vendor lacks financial stability. That is, will support and improvements flow when we need them? If the smell of death is believed a product with less polish and in respects inferior (but better market numbers) will triumph*. As I said I have seen it happen. Business has no road map to assured success by following a recipe. Moreover, following an entity that has shown the way may result in failure for the follower. One must always gauge the prospects, by their past behaviour, tendency towards change and what makes them open to change. It [business] is an experimental pursuit where success is never a sure thing in an open market. So tell me again why you think Canonical are such laggards. Oh yes, one other point. How many times have you heard how badly Redhat support really is? Having observed them in action, from a distance (when it counted), the blow hard shouters are ignorant. * I actually approved of the change, because I thought the substitution was the better product, until I looked more closely. Both still exist, but the dumped product has lost market share. |
| jdixon Oct 28, 2008 9:55 AM EDT |
> ...is Ubuntu server a superior product compared to RedHat/CentOS or Novell's SuSE server offerings? Not by any reasonable standard I can think of. However, they offer both a supported server and desktop, which is more than you can say for Red Hat (Novell, to their credit, does offer a supported desktop). I believe there are also differences in their support requirements which might make Canonical significantly cheaper than Red Hat for most companies (I can't speak for Novell). So with regards to price and a complete desktop/server solution, Canonical probably comes out ahead. |
| TxtEdMacs Oct 28, 2008 10:20 AM EDT |
jd, You would have a hard time realizing how little role pricing plays. Corporations will pay and even over pay, but they are seeking reassurance that when they are in dire need the support will be there. Therefore, they tend to be very reluctant to support an entity they believe might perish in the interim. Txt. |
| jdixon Oct 28, 2008 10:40 AM EDT |
> You would have a hard time realizing how little role pricing plays. Oh, I have a pretty good idea how little role pricing pays. Most companies (the one I work for included) still pay for Microsoft Office after all. But you asked if Ubuntu Server was superior, so I mentioned the places where it was. |
| rijelkentaurus Oct 28, 2008 11:06 AM EDT |
And Red Hat has a very nice desktop offering, it's "Workstation" and it's $179 a year...they just don't have a free one. ($179 the last time I checked...could be different now). EDIT: Here is their pricing list, not too bad considering...the price for the Desktop is about the same as Mandriva's, although I'm sure it lacks the breadth of applications. Adding the Dag repos would take care of a lot of that, however. https://www.redhat.com/apps/store/desktop/ |
| jdixon Oct 28, 2008 1:14 PM EDT |
> And Red Hat has a very nice desktop offering, it's "Workstation" and it's $179 a year "Workstation" != "Desktop" :) By comparison, Novell's price for SLED (their desktop offering) is $50/year. http://www.novell.com/products/desktop/lower-cost.html |
| garymax Oct 28, 2008 1:26 PM EDT |
txtedmacs You wrote: "So tell me again why you think Canonical are such laggards." I never used the term. And after spending nearly 15 years with Procter and Gamble I know how big business thinks. My only concern was that Canonical is using the desktop as a loss leader and NOT as a profit center. Another criticism of Canonical is that their support offerings are over-priced. (I do not know where the "laggards" come in.) |
| herzeleid Oct 28, 2008 1:32 PM EDT |
Quoting: Ok, back to business: first, is Ubuntu server a superior product compared to RedHat/CentOS or Novell's SuSE server offerings? Or at least, does it offer advantages over the competition?Absolutely. The package repository and management tools alone are a huge win over rhel and sles. I've run redhat shops, and more recently, suse shops, and I have to say, I really like ubuntu server. It's lean and efficient, and a joy to manage. I'd recommend ubuntu server without reservation, the only exception being for those applications where a 3rd party vendor is not yet on board with ubuntu support. But for generic unix services, ubuntu makes perfect sense. Quoting:I suspect the answers at best are maybe to no.At best, the answer is "hellz yeah!" At worst, the answer is "well, it depends". |
| rijelkentaurus Oct 28, 2008 1:33 PM EDT |
Quoting: "Workstation" != "Desktop" :) That's really a fine line at best...in fact, I'd say it's no line at all, just a matter of semantics. Red Hat Desktop is only $80; Workstation includes software and support for Samba, NFS, etc. I don't even compare SUSE and Red Hat. Aside from the possible MS-tainting (depending on your POV), Red Hat is far more stable and less resource hungry. I admit that the last I tried was SLED 10.x, but it was so slow on my laptop that I had to dump it. RHEL 5 ran like a dream. Mandriva runs circles around them both. YMMV, of course. :) I think Canonical's problem is that they put out a new version every 6 months, and are always determined to meet that deadline. With Red Hat, it's every 18-24 months. Mandriva is every 6, yes, but they are also not in the $$ league of Red Hat (at least not yet...may fortune treat them well!). Having lingering bugs in the desktop products is hurting Ubuntu. The techies who would love to put something in their infrastructure are less likely to do it because they are so painfully aware of all of the unresolved bugs that make it into each release, and never get resolved even after the next. This shoddy quality is the main thing hurting Ubuntu, I think if they put forth a solid product they'd be much better off. |
| herzeleid Oct 28, 2008 1:34 PM EDT |
Quoting:Red Hat is far more stable and less resource hungry. I admit that the last I tried was SLED 10.x, but it was so slow on my laptop that I had to dump it. RHEL 5 ran like a dream.We live in different universes apparently. |
| rijelkentaurus Oct 28, 2008 1:35 PM EDT |
@herzeleid....perhaps we do. I can't stand SUSE. And the faster Novell dies, the better. |
| jdixon Oct 28, 2008 1:59 PM EDT |
> That's really a fine line at best... A fine line possibly, but one relatively well marked. :) In this context, a desktop is considered a general purpose office computer, while a workstation is higher end computer usually used for engineering or programming. While there's little physical difference, the software selection is usually markedly different. > I don't even compare SUSE and Red Hat. To be fair, neither do I. I was merely using their price as a reference. > Mandriva runs circles around them both. As does Slackware. > I think Canonical's problem is that they put out a new version every 6 months... That's what the LTS releases are designed for. How well that's working is debatable. Anyway, the point is that Red Hat's desktop offering is a second tier product for them, while it's the core of Canonical's offering. That does make a difference if you're looking for a complete package. > The package repository and management tools alone are a huge win over rhel and sles. That I'll grant. From everything I've heard and seen, apt-get based distos are much easier to maintain than rpm based ones. |
| DiBosco Oct 28, 2008 4:25 PM EDT |
Quoting: That I'll grant. From everything I've heard and seen, apt-get based distos are much easier to maintain than rpm based ones. I assume that doesn't intimate that apt-get systems are easier from a user's point of view? (Not being sarcastic here.) I have seen claims that Synaptic is superior to, for example, Mandriva's rpm package manager but was never sure whether that was just someone who was a *buntu fan who didn't know what he was on about. Mandriva's system seems first class to me. |
| herzeleid Oct 28, 2008 5:38 PM EDT |
Quoting:I think Canonical's problem is that they put out a new version every 6 monthsAm I the only one that noticed that ubuntu is quite popular? Most distros would love to have their "problem". As an aside, they put out an LTS release every 2 1/2 years or so. |
| tuxchick Oct 28, 2008 5:50 PM EDT |
I listened to their phone conference yesterday, and Mark Shuttleworth said that the fast release schedule was attractive even to enterprise users. There is a growing segment that doesn't subscribe to the old way of using only moldy old stable software releases for servers. They want new features, and especially improved power management. Saving money on power is a huge deal right now. And like herzeleid said, they have something for everyone- both the LTS releases and the in-between shorter releases. |
| Steven_Rosenber Oct 28, 2008 6:42 PM EDT |
I think the problem with many of these distributions, from an enterprise perspective, is that they are dependent on a single person for either their financing, leadership or technical prowess. Now some would say that the "benevolent dictator" model of Theo de Raadt and OpenBSD makes for a better-focused product. And if that focus is what works for your application, then it's all good. The same could be said for Patrick Volkerding and Slackware, Mark Shuttleworth and Ubuntu (though his is more about money and not so much about coding), or any number of other open-source projects. What's the plan if the No. 1 guy is no longer there, either due to incapacity, death or lack of interest? While it's not directly comparable, you could say the same thing about Apple and Steve Jobs (or even Bill Gates and Microsoft, though he's pretty much out the door). But in the case of Ubuntu, what happens if Shuttleworth passes and his heirs aren't so excited about bankrolling a Linux distro? Ubuntu would continue, but there's uncertainty there. You could say the same about any of these other projects. There could be power struggles, halted development, even disappearing repositories. In a much different way, Microsoft has to deal with Gates easing out of the day-to-day. But Microsoft will go on. Be that as it may, one of the reasons the enterprise loves Red Hat and is willing to pay for it is that the company will be there next week (and month and year) and is not dependent on one person for its very existence. And the enterprise loves long-term support. It's nice for hobbyists to change Linux distros the way they should be changing their underwear, but that would never work on a large scale. It's all about setting up the system, making it work and then patching it as long as is possible and practical. It'll be hard for Ubuntu to gain too much traction in terms of revenue from the enterprise until the company can stand on its own, without Shuttleworth, and has a business model that is "cash-flow positive." Red Hat's strategy of having a desktop product but mostly pushing Fedora is probably a good one in terms of resources and revenue. However, Red Hat does risk losing new business if users start with Ubuntu on the desktop and then find themselves needing servers and choosing what they already know. Perhaps that's idle speculation on my part. The eternal question for everybody in this so-called business is how to balance "free" with "we need money." To that, I have no answer. Quoting:There is a growing segment that doesn't subscribe to the old way of using only moldy old stable software releases for servers. They want new features, and especially improved power management. Saving money on power is a huge deal right now. That may be true, but when the hardware stays the same, it can be a real pain to continually change the OS. In Linux anyway, it's hard to know what hardware is supported from release to release — or at least it's hard for me to know. |
| TxtEdMacs Oct 28, 2008 6:57 PM EDT |
garymax, Granted you did not use the term laggards, however, I sense in your tone some exasperation at the slow rate Canonical seems to be pursuing its Ubuntu server business plan. From your quotes I sense impatience: Quoting:Canonical, on the other hand, will take another three to five years to be profitable. Anyone see a problem with this?This conveys the message that you think Shuttleworth is moving too slowly. And the quote that follows seems to sow doubt that he is up to the task. Quoting:Mark Shuttleworth is banking on a windfall after he has established himself. It looks as if they have already done that. Then why is the server side such a hard sell? You may not use the word laggard, however, your tone and words seem to imply too slow a pursuit of profitability. I think you are wrong on two fundamental aspects, the least of which is the difficulty for a late comer to crack the Linux server market. I have reasons to believe Shuttleworth is not your conventional business person where profits are his paramount concern. Moreover, do not assume his sole focus is upon Ubuntu (and Linux). He has stated his interests are much wider. I suspect regarding Ubuntu, he would settle for a sustainable entity over a wildly profitable one. A sustainable business entity that produces a quality product need not be awash in cash. From a conventional business perspective, Canonical's business plan seems, indeed, too slow for the environment. But again that may be part of his plan. I will admit there are two potential errors that I may be making. I could have misinterpreted Shuttleworth's real intentions. If so that will eventually become known. And I could have misconstrued your words by applying the wrong tone to your text as I read them. Regarding the latter, only you can really know what you were thinking. If I come across too harsh, that was not my intention, particularly when I am trying to be serious. [If I were joking I would gladly shred any and all. Did I tell you about our business venture with dino ... ok later, but come early before all the shares are gone.] Txt. |
| jdixon Oct 28, 2008 8:52 PM EDT |
> I assume that doesn't intimate that apt-get systems are easier from a user's point of view? From the view of whoever is maintaining the system, be that the end user or not. However, as I've noted with Caitlyn, ease of use is a very subjective matter. From what I've heard and seen first hand, I would find an apt based system easier to maintain than an rpm based system, but that may not be the case for everyone. Of course, since I use Slackware, it's a moot point for me. |
| azerthoth Oct 28, 2008 9:32 PM EDT |
dunno, Sabayons entropy ranks right up there. 'equo update' to sync databases, 'equo install ' for a one shot install, 'equo world' for whole system upgrade, and 'equo world --upgrade ' to switch to newest version, or amazingly back to the previous (the last is potentially hazardous). |
| garymax Oct 28, 2008 9:50 PM EDT |
TxtEdMacs I'm not impatient. After all. I run Slackware. I just believe that the server market is not an easy nut to crack when there are other established players. And Shuttleworth has stated that he wants a return on investment. And he's not getting any return from the desktop. If he wants to wait another three to five years, that's his call. But other players may enter the market and delay his efforts. Who knows? I just believe smaller distros have better economies of scale when compared to Canonical at this point. |
| ColonelPanik Oct 28, 2008 11:10 PM EDT |
So many Open Source Software business models, so little time to prove them. Some of these distros are working with the business model that they picked when they started, some are making it up as they go along. A few are just so happy doing nifty software that they do not care. Some of the usOFa auto companies have been around 4 times longer than any of the OSS companies and it seems that they do not quite have a handle on business yet. The computer crowd, both HW and SW are unlike anything that has gone before. That new culture needs new ways of doing business. |
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