How Red Hat shake up global market Part 1

Most startups sell ideas in some niches, seeking to ultimately narrow down your competition. However, from time to time there are projects which can not just to gain a foothold on a small island market, but also to conduct large-scale expansion, forever changing the rules of the game.

American company Red Hat (“red hat”) at the time it failed. And although Red Hat software, entered the market more than 20 years ago, the success story of the project and will provide guidance to IT entrepreneurs.

Whether played in this case, a role the luck factor? Of course. Was the success of Red Hat an absolute coincidence? Of course not.

Image result for red hat

Try to identify several key aspects of the business model that will allow a small company to become an industry giant:

  • Accounting market (the growth of popularity of the software open source) in product design;
  • Active use of non-standard ideas;
  • Attention to opinion of users and experts of the industry;
  • The absolute faith of the founders in the success of the chosen development model, initially subjected to criticism from venture capital investors;
  • Supply of patience, which allowed us to stay the course, while the users were not yet ready to fully accept the product.

After the company began to grow steadily, began to grow and its founders. They established themselves on the market status of the leaders and had the opportunity to enter into profitable agreements with partners, which contributed to the extension fields of the Red Hat.


Main product Red Hat is a Linux operating system. In 2015, revenue was $1.8 billion, despite the fact that Linux is free. How can this be?

Red Hat earns on technical support for users of the operating system and providing various services.

The uniqueness of Linux lies in the fact that the client can easily adjust the system to fit your needs. Cornell University (Cornell University), for example, uses Linux to work with large volumes of information in the study of DNA. CME Group uses Linux to manage billions of transactions each year in the financial market.

Presented below graph shows the net profit of Red Hat for the first seven years. History Red Hat is kind of the story of David and Goliath (in the role of Goliath, of course, made by Microsoft).

Opening in 1995, a tiny office in North Carolina, founders of Red Hat, Bob young (Bob Young) and mark Ewing (Marc Ewing) — the course decided to compete with himself, bill gates. And on his own patrimony, namely in the field of software.

Given that Microsoft at that time was already 20 years old, the solution to aspiring entrepreneurs might seem crazy. However, to regret the choice they never had.

In 1981, Bob young opened the firm Vernon Sales and Leasing and began to take computers to rent. In 1990, young sold the firm Greyvest Capital, receiving in return shares of the latter. Formally, the entrepreneur became a millionaire, but after the fall of the stock price forty times the young in a there are very small amount.

However, Yang continued to work in Greyvest Capital. In 1991, he opened an office Greyvest in new York. After the fall of prices of personal computers, young became involved with rental servers. In search of customers, he began to attend meetings where programmers discussed the latest trends in the software world, and in particular the use of Unix.

Bob young recalls:

“Programmers were not happy with the fact that their meetings dangle the sales Manager, and I, in turn, felt a man from another world”.

Organizational skills helped the young. He created a newsletter, New York Unix, and began to hold meetings for programmers, having the opportunity to make contact with them.

However, in 1992 Greyvest fired young, and he decided to focus on New York Unix. He tried to earn advertising in the publication and also began to pay great attention to feedback from readers.

Readers showed interest in the idea of free software distribution and program Linux. Leading trade publications mostly silent on these topics, and Bob young was willing to bridge the gap. However, at the time, Yang did not have the slightest idea about free software.

Image result for linux

The Rise Of Linux

The beginning of the history of open source software can be considered as 1979 when AT&T decided to register the copyrights to Unix. The community of programmers, this news has caused a flurry of indignation. Many likened the consolidation of the individual company exclusive rights to use the Unix copyright to the alphabet.

During the 80s the community of programmers tried to create his own version of Unix, but the stumbling block was the lack of a unifying core. To find it was a 21-year-old Finnish student Linus Torvalds (Linus Torvalds). Some time later, saw the light of Linux operating system.

Of course, in the early stages of the development of the new OS was out of sight of the General public. Linux was mainly interested in the geeks who voluntarily joined forces to improve the system.

Microsoft and IBM tried to offer the market something similar, but their products do not allow the user to fine-tune the OS for specific tasks, and therefore not enjoyed great success among programmers.

Leave a Reply

Your email address will not be published. Required fields are marked *