U.S. open source companies should go into holding pattern according to Red Hat CEO - Open Source Software Up the Stack

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March 25, 2008
U.S. open source companies should go into holding pattern according to Red Hat CEO

This Infoworld report on Red Hat CEO Whitehurst's speech on March 25 is potentially provocative to the say the least. The speech as reflected in InfoWorld illustrates that Whitehurst does not yet show much understanding of Red Hat's own industry, the software industry, which is not unexpected because Whitehurst just joined the industry from the air transportation industry a few months ago.

As I see it (based on a few paragraphs in the Infoworld story):
-- Hopefully Whitehurst was misquoted. But if not, the statement that U.S. unpopularity around the world (presumably referring to political issues related to the Iraq war, I guess) is good for open source just plain does not compute. One thing I have like about the software industry--and the IT industry as a whole--is that it has been multinational since the 1970s. If you deliver the goods, you get the order whether you work in Belarus or Boise. This guy apparently isn't going to settle for a shot from Steve Ballmer or Larry Ellison; he's hoping Rush Limbaugh will come after him.
-- Non-U.S. "people are resentful of sending billions of dollars back to the U.S." Take that, IBM, Oracle and many other leading open source proponents who get a large percentage of their revenue outside the U.S. (although most likely they are not repatriating it too quickly). This is probably good news for Microsoft. I am not sure exactly how Microsoft cash flows (vs. reported revenues) move geographically but I would guess that the big chunk of it that pays for the copies of Office and Windows OEM'd onto PCs made offshore and sold offshore doesn't come "back" from anywhere; it most likely just moves EFT from Red Rock to Redmond.
-- Red Hat's business model, to the extent he means its revenue model of subscription maintenance fees and professional services revenue is basically no different than IBM's or Oracle's (except that the others get a little more revenue upfront). Why should those nasty 'furriners' be more willing to send "dollars back" to RTP than Armonk or Redwood Shores?
-- Chinese and Russians don't want to pay an "intellectual property tax" to U.S. companies. Is Whitehurst condoning piracy?
-- "The dollars in open source relative to what we (Red Hat, I think) do are relatively small," he reportedly said. Well it's about 20% of the total, if conventional wisdom market size numbers are accurate. That's the same percentage that Microsoft represents of the overall software market.

Yahoo Finance reported, also under Infoworld reporter Paul Krill's byline, that others at the same conference feel that pending economic woes are good for open source.