Since Red Hat no longer tells us what the RHEL subscription revenue is, I know that in FY2009 it was well over $400 million out of the $541.2 million subscription revenue reported. I would say that the number is close to $450 million for RHEL subscriptions.

BTW, I wrote all of those competitive papers for Novell that someone was talking about earlier. There are similar papers for RHEL and Solaris 10 on x86 so Microsoft was not Novell’s main competitor, it is Red Hat. I spent much of my time working on competitive papers for SLES vs RHEL, even on System z.

Good discussion.

Bill

There you are.

Also, two quick thoughts from The VAR Guy:

1. Novell: Yes, Novell has a pretty diverse product base. That’s both a blessing and burden. Identity management, data center consolidation … all good areas for Novell’ potential growth. But Novell has to do a better job connecting the dots between its products.

2. Red Hat: You suggest Linux is the only thing Red Hat does. That’s no longer true. Red Hat’s JBoss open source middleware business is growing faster than Red Hat’s Linux platform business.

Still, it’s good to hear your thoughts on Novell.

Novell will not get any significant NetWare revenue after that. So what does it mean for Novell? It means more focus on Linux more focus on SUSE Linux Enterprise Server and Desktop and their solution product line. Well, RedHad has OS too, right? So what’s the difference? I think, it is in the amount of Linux Solutions and products offerings.

In my opinion, Novell has quite a few different product lines compare to RedHat ( not just OS and Destkop). For example, Identity Manager, UserApplication, GroupWise, iFolder, Teaming, eDirectory, ZENworks…..
All those “solutions” are running on Linux. ( When NetWare dies it will give Novell more development resources to spare on Linux)

I think RedHad has more focus on Linux because that’s the only thing they do. Novell has a lot of legacy products that they continue to support, but that slowly going away. I do see more clear sky and more sun for Novell in the future.

1) A $600 million open source business that’s growing at 10% annually ($60 million)

2) Or a $100 million open source business that’s growing at 30% annually ($30 million)

Example 2 has the faster percentage growth rate. But The VAR Guy will take the $600 million/10 percent growth over the $100 million/30 percent growth every day of the week…

Using the numbers you give in this article, Red Hat’s open source growth rate is 14% and Novell’s is 30%, meaning that Novell’s open source sales are growing a little more than twice as fast as Red Hats…

You might wanna stick with journalism Var guy, ’cause I don’t think your math skill is quite up to snuff.

My only question, is why does Red Hat have to compete with Microsoft? In fact, Red Hat isn’t competing directly with Microsoft (although they certainly do overlap in areas). I’m not sure why some people think the only way for a Linux vendor to be successful is to slay Microsoft. They’re a Linux and middleware vendor. They have shown absolutely ZERO interest in going after the desktop. They’re working on an identity management system, but it’s certainly not a priority for them. They’ve never claimed to be going after Microsoft. So why should they outline some big strategy to go after Microsoft? Red Hat knows it’s market and has executed it’s strategy wisely to grow the company.

Novell on the other hand already had legacy products competing with Microsoft so of course they’re going to try to come up with a Linux solution to take their place. Unfortunately they’re kinds stumbling around and haven’t really come up with a compelling solution.

Be careful about how you characterize the MS-Novell voucher arrangement.. you have to look very closely at how Novell accounts for the money for the subscription vouchers they sold to MS. It was a cash injection quarters ago now..which is being accounted for on the books as multiple quarterly revenue across the number of quarters associated with the terms of the service arranged for by the voucher.

If you look at the transcripts for the quarterly conference calls however I think they’ve said they haven’t gotten any new customer contracts through the voucher arrangement for this last quarter, and I think the previous quarter…but you’ll need to double check that I could be remembering he transcript incorrectly. The voucher money sort of forms a baseline for quarterly reported revenue..but its not underpinning the quarter-to quarter revenue growth that Novell has reported in the last quarterly filing. That’s my understanding at least.

In any event…the real test for the long term impact of the voucher deal will be when the service contract period associated with those vouchers is up and customers have to choose to pay to renew SLES subscription contracts or not. My understanding is that hasn’t happened yet and its also my understanding that the customers using the voucher were relatively large deployments from a few customers…not a lot of little deployments. If Novell can’t renew those big customers that will have a big impact on the quarterly revenue once the term of service for the vouchers expire. If they do renew those customers, then it will more than justify cutting the deal with MS to begin with.

-jef

Yep. They’re so successful against competing with Microsoft that Netware customers continue to jump ship, Microsoft is having to sell SLES for Novell and Novell entered into a deal that all but said “Pretty please don’t kill us!”

Novell’s Netware revenue where they directly compete with Microsoft and Windows Server is declining, has been for years, the figures don’t lie and they can’t be refuted by wishful thinking.

“In fact, since Red Hat, and NOT Novell, ships an arbitrarily limited “enterprise” version”

In what way?

“So… I’m still going to bet on Novell with a total annual revenue that is almost twice that of Red Hat, yet a company that has a market value almost a fourth of RHT.”

There’s a reason for that, and the Varguy has pointed out what the issue is with Novell. Novell’s traditional bulk revenues come from mainstay software like Netware, but they’re declining and there’s no growth in site or even hope of arresting that slide. There’s nothing there to give their older software hope of competing. That should have been kick started by using Linux and open source software but nothing has happened on that front. The old mainstay software is on life support and Suse’s Linux revenue is a miniscule fraction of the whole so you don’t need to be a genius to see that revenues are still falling.

The market knows a brick falling when they see one.

Also, realize that ONLY Novell has whitepapers and competitive offerings that COMPETE against Microsoft. Where’s Red Hat’s info? Nowhere to be found. In fact, since Red Hat, and NOT Novell, ships an arbitrarily limited “enterprise” version, this is the version that Microsoft uses over and over and over again to PROVE their TCO is way lower than Red Hat… well, actually they say LINUX. So why does Red Hat want to arm Microsoft? I’m serious. I know the people (without knowledge) want to focus on Novell’s business partnership with Microsoft, but ONLY Novell actually competes head to head with them. The ONLY competitive data you’ll find at Red Hat (and it’s weak at best) is against Solaris… which is arguably dead.

So… Red Hat, what are you so afraid of? Is there a “deal” unknown in your Microsoft relationship that forbids you from painting Microsoft in a bad light?

Kudos to Novell for at least showing that enterprise Linux is very appealing vs Windows. Wish Red Hat could get that message.

So… I’m still going to bet on Novell with a total annual revenue that is almost twice that of Red Hat, yet a company that has a market value almost a fourth of RHT. Yes… Novell is still figuring things out. Red Hat seems to of figured out the best way to not offend the 800lb gorilla is to run away from it.

I’m not anti-Red Hat, I own interest in both companies. RHEL 5 is the FIRST enterprise worthy release from Red Hat. In comparison, SLES has been enterprise worthy for several releases.