Redhat Fedora

Bob Drzyzgula bob at
Wed Sep 24 23:51:33 EDT 2003

On Wed, Sep 24, 2003 at 08:54:46PM -0400, Robert G. Brown wrote:
> On Wed, 24 Sep 2003, Bob Drzyzgula wrote:
> > 
> > Also, I'm thinking I must not know enough about Mandrake's
> > cluster distribution. Looking at their website, it
> > seems to cost $2320 for 1-8 processors, $4176K for 9-16
> > processors. Why would a cluster shop that had previously
> > used Red Hat Linux choose to use Mandrake rather than
> > Red Hat's Enterprise WS distribution, which costs $299
> > per single- or dual-processor system, except perhaps on
> > technical grounds?
> The interesting question is why anybody in their right mind would pay
> for any sort of GPL-based distribution that scales per number of
> processors.  Especially pay numbers like these.  Hell, one might as well
> be running Windows.

There are two reasons, actually, that I can think of,
although they only apply in specific environments that
probably don't include e.g. universities that are strapped
for cash but have a near-inexhaustible supply of cheap
labor near at hand. These reasons are:

(a) The promise of support. This is generally more
for managers than for the techies, since in a large
proportion of cases, the techies most likely know
what they are doing. But managers often don't know
enough about the technology to know whether to trust
that the techies know what they are doing (and perhaps
have occasional real-life experiences with failure
in this regard), so they at a minimum want to know
that there is someone at the vendor who's *job* it
is to pick up the phone and answer *their* questions.
This may seem irrational, but it isn't really.

(b) The promise of a patch stream. This is the thing
that is of more actual use to the techies. Especially
with the way that RPM works, maintaining patches for
an older distribution gets to be a real burden, and
it is quite clear to me why Red Hat is trying to get
out from under this, especially for the "consumer"
releases. To some extent, it's their own damned fault
what with the way that find-requires works to build
in dependencies on dot-releases of system libraries,
but in any event the availability of tested, binary
patches for a three-year-old system is of real value
and IMHO is worth paying for. Maybe not thousands of
dollars per system, but then if I had millions of
dollars of income riding on a system, thousands might
not seem like all that big a deal.

Again, this all likely seems more attractive in a
business setting than in a University setting.

> I personally think that the global Internet has long since moved on to
> a place where this just won't fly, especially for GPL software.

I think (and certainly Red Hat is betting) that it
will fly with enough customers to make them profitable
in the long run.

> It's almost funny, in a very sad sort of way.  People all over the world
> (many of them on this list) have written and contributed the actual
> software and continue to maintain it.  Red Hat is now preparing to turn
> around and sell our own software back to us at an absurd markup and with
> little (really) added value other than the distributional packaging and
> testing.

I'm not certain that this is what they are thinking. I'm
guessing that they know full well that "we" [and I use "we"
for the purposes of this discussion but acknowledge
that I personally probably don't belong in this class,
not having contributed much of anything] will never pay
them any money for this, just like we haven't been paying
them any money for it in the past. In this regard, yes,
they have written us off. But I think that they have
to be given credit for at least attempting to set up a
structure within which we can help to maintain a usable
RedHat-style distribution in the long run, without it
being such a money pit for them. There is certainly lots
of precedent for companies just dumping unprofitable products
without such a gentle transition.

> I personally think that what is going to happen is that the community
> will interpret this as control and just route around it.  People on the
> Internet proper will just ignore the prices; corporate managers who feel
> a need to "buy" something may pay them.  Companies seem to be trying to
> treat open source software as a proprietary product and moving away from
> the support model.

Well certainly I can think of one Utah-based company in
particular that is taking this to absurd levels, but in
Red Hat's case I think that they're just trying to find
a way to make a sustainable profit on this. I don't see
that it makes sense to begrudge them this -- they're not
a volunteer organization or even a non-profit.

I'm not sure what you mean by "moving away from the support
model", because it seems to me that what Red Hat (and
others) are doing is, on the contrary, to make support
the *product*. All the nonsense about proprietary logos
and per-system licenses is nothing more than a lever
to coerce customers into buying this support. Unlike
closed-source companies like Microsoft, though, Red Hat
is *not* preventing you from using the software without
buying this support, but they are making it very difficult
for you to take advantage of all the stuff they do to
make it *easy* to use their software without paying --
making it easy is what they're trying to charge for.

> The real tragedy associated with this is that linux is finally maturing
> to the point where it could really challenge on the desktop, not just
> the server/cluster/specialized market, and these absurd prices could
> retard that process for years.  Red Hat in particular has missed the
> boat by charging crazy prices for box sets for some years.  What, they
> think Joe Consumer is going to buy a box set of linux for $150 when it
> comes "free" and preinstalled on their PC?  They should be selling box
> sets for $15 and trying to sell a LOT of them, not a few at crazy
> prices.

But they have been doing that, and what they have been
doing has sound economic basis.  They've been segmenting
the market, charging each customer according to his or
her propensity to pay, much for the same reason that
car prices have typically been negotiated. In the past,
customers have been able to buy Red Hat Linux for next to
nothing -- the cost of downloading the ISOs and burning
them on to CD-Rs, or even just borrowing their buddy's
copy. They've been able to buy it for $10 or so by
ordering white-label CDs from Cheap Bytes. They've been
able to buy it for $40 or so by picking up a book on Red
Hat Linux at the bookstore.  They've been able to buy a
basic version with a real Red Hat label for maybe $50, and
a nice box with an official manual, some amount of support,
and CDs containing all sorts of crap for $150. And recently
they've been making it available for prices extending into
the thousands of dollars, with all sorts of hand-holding
thrown in. They've thus been making Red Hat Linux available
at a near-continuum of prices, and letting the customers
decide how much they'd like to pay.

This is a pretty classic formula for maximizing your income
on a product, because at the low end, you wind up getting
at least a little money from people who otherwise wouldn't
have given you anything. The freeloaders are of course a
loss but you can at least hope that you've picked up some
good will and maybe they'll think of you when they are in a
mood to spend actual money. And you can wind up getting
some bigger chunks of cash from the people who don't
mind parting with it if it gets them something that's all
dressed up nice and pretty.

However, I think what we're seeing now is that their
product is well-enough established in the market that they
believe they can do a bit better if they knock out some of
the lower prices, and make a somewhat larger distinction
between the free "toy" product and the expensive version
intended for the "serious" customer. It is of course
possible that they've misjudged the market some and they'll
have to fine tune this again, possibly by continuing to
take snapshots of Fedora Linux and calling it "Red Hat",
in the same way that Sun repackages some builds of Open
Office as Star Office and Netscape had been using the
occasional build of Mozilla for a new release of Netscape.
But for now this is what they're going to try, and judging
from their latest quarterly report, it seems to be working.

> > > nor are "we" willing to pay enough for
> > > vendors (like Scyld) to build cluster distros.
> > 
> > This sounds right.
> Absolutely.  It is a matter of what people need.  MPI, PVM, and more are
> often or even generally available in rpm format and are a whole lot of
> what people need.  The cluster users who need to go a long way beyond
> this exist, but there are fewer and fewer of them at each additional
> price notch.  COTS HPC clusters were invented because they were a CHEAP
> road to supercomputing that supported the needs of a hell of a lot of
> HPC cycle consumers with only a few, relatively simple tools.  The same
> issues exist with Myrinet and SCI -- I'll be there are dozens of
> clusters installed on plain old ethernet for each one of the clusters
> installed on high end networks (which, frankly, are worth a lot more
> than high end/expensive "distributions" since Red Hat cannot alter the
> fundamentally limiting computation/communications ratio at a given task
> scale, but a faster network interface can!).

Well, I think that this is an important point, and
what I'd say is that it reflects how the cluster
market is different from the general-purpose 
business market. 

> So pay no attention to the high road.  Distribution vendors that take
> the high road are going to starve on a rich diet of a few high margin
> sales, just as a lot of the traditional Unix vendors have been doing at
> ever increasing rates ever since linux was invented.

But the problem with traditional Unix vendors, I believe,
has less to do with the price of their operating system
than (a) the price of their hardware, and (b) the lack of
openness in the operating system.  Linux is pulling people
away because it allows them to take advantage of such a
wide variety of hardware, and because they have nearly
unlimited choices in sources of support for their systems.
Linux shops can be exactly as price- or quality-sensitive
as they want or need to be and still use Linux. A little,
cash-starved non-profit can run a usable file/print/web
server on a box they picked up from the Salvation Army
store for $50, while a Fortune 500 shop can consolidate a
hundred different services onto an IBM mainframe running
Linux under VM. The non-profit with the $50 server can
pay the secretary's teenage son $10/hour to dig around
and figure out why Samba is broken, while the Fortune 500
can pay IBM six or even seven figures a year to keep the
system running like the proverbial well-oiled machine.
As it stands, because of the GPL, the distribution vendors
are *never* going to get any money out of that non-profit,
but as long as the high-end systems work and excellent
support is available, those high-margin sales are going
to become more and more common; I really don't see the
starvation you're expecting.

> Look instead to the low road.  Look to distributions (like Debian or
> freebsd) that charge nothing, or charge a very modest low margin fee.
> In the market of the future one will be able to grow fat on huge numbers
> of LOW margin sales, just as Microsoft (for the most part) has for
> years.  If Sun Microsystems had released their perfectly good Unix for
> PC's for a retail price of $15/system in a box set a decade plus ago (or
> even $50), Linux would never have gotten off the ground, Windows NT
> would have been killed in its cradle, and Sun would own the universe.

Ah, but what would it have done to SPARC sales? Sun's
situation is quite different from that of a Linux vendor
such as Red Hat, in that Sun's business model depends
on selling high-margin hardware.  Solaris x86, IMHO,
was always intended as a loss leader designed to get
people hooked on Solaris, and draw them into buying the
real thing to get broader range of applications support
and greater hardware scalability. They never intended
Solaris x86 to become a first-class solution platform in
and of itself. Sure, a few VARs and ISPs made it work
as one, but Sun was never comfortable with that and as
you recall they tried a couple of years ago to kill it
off altogether. Scott has always been adamant that he
was never going to allow Sun to be held hostage to an
externally-defined hardware architecture. One of his
favorite sayings was that Sun has never lost a dime
selling a PC.

To a large extent this worked, but IMHO the mistake they
made was when they got too greedy in the late 1990s and
allowed the low end of their product line to languish; Sun
hated the thought that a customer might be able to build
their network around $10,000 machines when $50,000 machines
could do the job just as well (yes, I meant that).  As a
result, in the past few years they haven't had anything
affordable to offer to companies who were seeing their
IT budgets drying up, and they were forced to sell x86
hardware and even -- gasp -- Linux to compensate for
this mistake.

> I think it must be the scent of blood in the water -- Microsoft is
> finally showing signs of distinct vulnerability, the linux desktop is
> finally good enough to sell to corporate customers, and the long awaited
> phase transition is at hand.  Now all the linux distro people can think
> about is how fast they can get their options and their shareholder's
> highly depressed shares above water.

Another way of interpreting the behavior might be
that, in slowed economic conditions they are finding
it necessary to either turn a profit in short order
or go under. While it may not make a lot of difference
in the long term for the scientific research community
-- we were getting along with Linux just fine long before
it became "profitable" -- I really think that the failure
of Red Hat in particular would be very bad for Linux
in general.

> Slow and steady (and low margin sales and true added value support) will
> win this race.  Red Hat is already facing a sort of defection of a
> rather huge part of their installed base; how long will they stay on top
> once the Universities and other institutions that provide their real
> base of programmers turn their energies to something that they don't
> have to turn around and "buy back"?
> With the GPL, not long at all, not long at all.

Again, I think that, while they may be losing a large part
of their installed base, they are not likely to be losing
a large part of their *income*. This is an important distinction
that goes a long way to explaining why they are doing it.

And again, they are giving us an outlet for our energies that
we don't have to "buy back" -- Fedora Linux. We don't have
to accept it, but I think it's a better gesture than we'd
get from a lot of companies. Back when Sun decided to cancel
Solaris x86, I didn't see them offering to turn the product
over to the community.


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