How Red Hat shake up global market Part 2

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The guy in the red hat

In 1992, when Bob young recognized from the readers of New York about Unix Linux existed, this project seemed a simple young’s experiment. He couldn’t even imagine that based on the altruism model can be successful from a financial point of view.

To the surprise of the young, in 1993, the popularity of Linux has continued to grow. Bob made the decision on creation of The Linux Journal.

Unfortunately, the income from publications was small. To pay the bills, Yang began to market a variety of Linux applications and other computer-related products.

Some time later, fate pushed Bob young 23-year-old graduate of the University of Carnegie Mellon (Carnegie Mellon University), Marc Ewing (Marc Ewing), who just at that moment opened in North Carolina store Red Hat. More specifically, multiple clients-Bob young, received from Ewing’s red CD with the beta version of his program (created by accident while working on one of the University projects), advised the young to meet a talented guy.

Why Red Hat and the red disc? Just during his studies, Ewing was known not only for his computer knowledge, but also a habit to walk around the University in her grandfather’s red lacrosse hat.

Yang appreciated the program, and he owned the online catalog became the exclusive distributor of Red Hat. After two months of working together, Bob young and Marc Ewing came to the conclusion that their companies should merge.

Quiet expansion

In 1994, the developers of proprietary software, such as Microsoft, IBM, Sun, and Apple still did not perceive free software as a threat to their business.

But Linux has grown with great speed. If in 1993 it sold 100,000 units, while in 1995 this figure amounted to 1 500 000 units. But NASA ordered the soft Linux on $40 000 to support the work of the supercomputer in “the Laboratory of space flights of Goddard name”.

The merger of ACC Corp Bob young and Mark Ewing of Red Hat. In January 1995, the company of young and Ewing was United. Each of the partners received 50% of the total enterprise, who inherited the name of Red Hat.

Later, to Finance the growing costs of the company its founders had to turn to relatives and friends. Eight people bought shares in the company from 10% to 15%.

Attracted funds thus Bob young calls “love money” — a kind of “investing from the heart” when people give you money not because they believe in the efficiency of investments, and just because I love you.

In the case of Red Hat, such investments were very profitable. Suffice it to say that the aunt of Bob young Joyce young in 2000 donated to the community Foundation of Hamilton $40 000 000.

The main drawback of Linux in the eyes of many potential buyers was the inability to obtain the necessary support. Red Hat solved this problem by differentiating their offering. People can choose one of two options:

  • To download a redistributable version of the software;
  • To purchase a CD with the official version, optionally including the registration number of the product, instruction for use and access technical support.

And because Red Hat does not spend money on programmers, the company had the opportunity to compete through lower prices. Software from Linux sold retail for $49.95, while a similar product from Microsoft — Windows NT was worth no less than $150.

In may 1996, Red Hat has released an upgraded version of its product, named Picasso. In October of the same year, he released another modified version of Colgate. However, the majority of people still do not understand what they can be useful with Linux.

It should be noted that provided the greatest resistance senior management who were not willing to risk millions of dollars for relatively small savings. However, their subordinates, not having the ability to spend on software $10 000, willingly purchased the product Red Hat, which cost only $49,95.

At some point, the technical Directors of companies from different sectors began to discover that the lower divisions are actively using Linux software. In such circumstances, the leaders had no choice but to accept the situation and start working with from Red Hat.

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Red Hat as a brand

The founders of Red Hat to understand how the role of the brand in the successful promotion of any product. Bob young at the time, wrote about it:

“Heinz owns 60% of the market, not because manufactured by this company ketchup is the most delicious. Heinz dominates due to the fact that the taste of this ketchup is perceived as correct taste.”

Resource was created not just as a place where you can download the software, but as a conductor of the philosophy of Red Hat.

The task is attracting attention was performed. The next step was to find financial resources. However, the model of development, involving the free distribution of the product, frankly, scared off investors.

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