RedHat Business Model Open Source Success

A Better RedHat Model to Replicate Today

If you look at what made RedHat successful you will find a unique story. Unique in a variety of ways. First, the marketplace was dominated with closed source box software and lacked any open source freely available products. The dominant players sold licenses of a single software version. Secondly, the notion of free software but paid support was practically unheard of. Again, the dominant players would offer a paid product with free support. RedHat offered a reverse on this model. Many people are aware of this part of the story. Many understand the implications of free software and paid support and how enticing this proposition was. It is easy to see how this caused the global market to shift. Free software regardless of the support is a powerful motivator for someone to begin using a product.

But this is where the majority of people think the RedHat business model ends. This is the point at which many new companies attempt to mimic the supposed “RedHat Model”. And this is the fallacy. Because this is not the complete RedHat model. Look deeper and you find a much more detailed strategy which helped to make RedHat successful. Even still what follows may not be a complete picture but should provide at least a slightly more detailed view of the story.

Though the “free software and paid support” model does play a role in the overall strategy there are many more levels of opportunity present. This is the key to a modern day RedHat model. These often overlooked additional features are how a current open source model can replicate the success found in RedHat. Here’s a better look at the RedHat model.

RedHat offers a freely available product; an amazingly good codebase available for anyone to download. Then, in addition to offering support for this product RedHat provides a wide range of additional services offered as add-ons to effectively make things easier for businesses. Note what this does not mean. This does not yield a sub-standard or crippled free open source code. The free source code is every bit as powerful and is the basis on which RedHat builds everything else. Rather than maintaining a separate and “better” product RedHat takes away the pain of compiling and building the finished product. Then they offer support for this product (everyone sticks on this part)…and they offer additional services focused on specific market segments.

This is a brilliant strategy for a number of reasons. This approach still supports and encourages open source completely. This provides anyone and everyone regardless of the size of their business or their revenue the opportunity to use incredibly powerful software. This allows a global community the opportunity to find and improve the software and to implement improvements that meets the goals and needs of the majority. This strategy empowers people. And this strategy also allows a successful business to be built around this product. But this is just the beginning. Structuring things in this way paves the way for other businesses to find success and also be built on this same amazing source code.

RedHat is more than a support company. RedHat is an open source company that empowers people regardless of size. They have turned an industry on its head and revolutionized the way software could be released for free and still be profitable. This strategy, this complete strategy, can be replicated. This is how you can be successful today replicating the RedHat model. Look at the bigger picture. Don’t neglect the community. Don’t cripple the core open source code. Build supporting services to meet specific needs. Empower people.