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Thread: How profitable is selling linux?

  1. #21
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    Quote Originally Posted by KC9UDX View Post
    What I wonder is... How profitable is reliably servicing Linux installations?
    Well as some one who has been forced to buy supported Linux from RedHat to full fill security requirements for the UK Government Network I would say its very profitable. Yes you can use CENTOS but out security auditors demanded that we have a support contract in place and the resultant bill made Microsoft look like a charitable concern that was giving their software away. I must admit its been a while since I was in that space so the requirements may be relaxed.

    I also believe that CENTOS do not provide builds that run on IBM Z because they don't have an Z hardware to test but I may be wrong.
    Dave
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  2. #22
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    At my last job, we trialed Linux-on-Z because IBM marketing tried to convince upper management that it would solve our existing performance problems on our IBM hardware. Not only was it 3x slower for the same I/O-based workload, but Sun hardware running native Solaris 11 utterly smoked the IBM hardware.

    To me, Linux-on-Z seemed like a solution looking for a problem.
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  3. #23
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    Quote Originally Posted by Unknown_K View Post
    Full fiscal year GAAP net income was $254 million <=== for 2017 with $2B in sales. Do they assume revenue is going to be exponential over the next decade because I don't see how they can profit from spending $36B with a return of only $250M a year.
    A 12.7% GAAP Net Income is nothing to sneeze at, but that's not what they're buying. They're buying the experience and customer base of Red Hat. A profitable company within IBM does two things; it brings that profit into IBM and negates the upfront cost for IBM to independently build that experience on its own. And with IBM's global positioning, it can leverage Red Hat to expand its own product offerings and reduce / retire other competing products within IBM that may not fit into IBM's future needs. For example, this would allow them to retire / replace AIX installations at a probable lower overall cost due to leveraging the Open Source Model.

    For IBM, they get a complete, robust platform with an existing customer base. The company they are acquiring is also profitable. They get an opportunity to save R&D plus sales costs to woo those customers over to an IBM only developed platform. They can leverage those savings other other areas of IBM which may not be as profitable and/or needing an update (AIX as the example) and expand their presence worldwide with the Red Hat expertise and brand image. All of this results in greater Gross Sales, lower operating costs and the possibility of increasing their newly acquired position in the Global Cloud business.

    Geoff, MBA MSF

  4. #24
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    There are plenty of companies that don't like IBM so if there is an alternative they will switch to something else or at least give an opening to another Linux vendor to get bigger.

    If IBM is still selling AIX then they will be supporting AIX for years even if they EOL it today, any savings would be very far down the road.

    I just see IBM strong arming customers to use Redhat on only IBM hardware leading to lost sales. I also see techs jumping ship because few people like working in IBMs culture.

    I mean you can make a great presentation on why this is a good idea while knowing none of those things are going to happen.
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  5. #25
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    IBM has been quietly active in the Linux area since the turn of the century. Example from 2001

  6. #26

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    Some of us were even paid by IBM to write open source software to support Linux ...

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