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Being Leonardo

Red Hat is able to do this because, although its business model is built on free and open source software it doesn't rely solely on the fact that the code is visible, but on the quality or otherwise of the services it provides.

Being open source gives access to larger development communities. Red Hat, like any Linux company, will benefit not only from the input and expertise of Red Hat engineers, but the self-interested input of companies like IBM, HP, Novell, SGI and Intel, and the developers who get involved just to 'scratch an itch'.

Self interest for a company that depends on open source means paying more than lip service to the developers. After all, the best ideas and innovations in the code, which give value to Red Hat's software, may owe nothing to Red Hat's creative input. As Linus Torvalds once expressed it: "When you get involved in open source, you get equal rights to be involved. You can be another Leonardo da Vinci. You aren't relegated to just paying for viewing his works."

Being open source also means that anyone can download and install, remodel, copy or sell the software. Red Hat gives away the software it contributes to free software projects. It follows that Red Hat also benefits from the ideas of others. Free software breaks down barriers of entry and makes it possible for other companies, big and small, to become engaged, whether by plugging into and developing existing open source projects, by providing support and added value, or by initiating new projects that can draw on wider resources. The open source principle opens up technology to those who wouldn't otherwise have access, a truth that is nicely summarised by an aphorism of George Bernard Shaw: "If you have an apple and I have an apple and we exchange apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas."

What differentiates one open source company from another is the quality of the released code, the integration of disparate utilities and functions, and the quality of service provided to the end user, some of which arises from the quality of the software, and some from partnerships with ISVs and OEMS. So Red Hat likes to quote the fact that it has topped the CIO Insight rankings for most valued software vendor five times in the last six years. When a company has built its business model on software that is available elsewhere or at zero cost, such evaluations are as good a measure as any of how well the company is doing.

This is a selling point for Red Hat. It is also a selling point for free and open source software. Red Hat's vulnerability to imitators, clones and improvers keeps it on its toes, because if it fails, someone else can step into its shoes. Nonetheless Red Hat is bucking the trend of the recession, and was able to report growth of 24.8 per cent in the last fiscal year with gross revenues of $652.6 million.

Next: Into the cloud

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