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I think there's a few things here to mention. Red Hat didn't "suddenly obsess over Openstack in the last 12 months", they were one of the first Linux vendors to embrace the "cloud", and as others have mentioned, they are now deeply entrenched. Red Hat posted revenue exceeding $1 billion for fy 2013. Canonical posted only $65.7 million. Red Hat could buy Canonical and throw it away, and it wouldn't even show up as a significant blip on their books. Canonical is not competing on the same level as the heavy-weight enterprise vendors (I know they want to be). Straying into my opinion. I want Canonical to do very well. As I mentioned, they are the closest anyone has ever been to becoming a household name with their Linux desktop (they are sooo freaking close!). But the problem I see with Canonical is the company seems to have a very bad case of ADHD. Canonical tries to do everything. Phone, tablet, desktop, server, windowing manager, init system, cloud, SaaS, enterprise support, package manager, weird-NUC-box-things, app-store, etc etc etc. This is far too much for a company that is barely staying afloat (they posted an almost $22 million loss for the same fy; about 1/3 of their total revenue lost). In most of the markets they dabble in, they show up late (sometimes very late), can't get a strong foothold, and will or have been shoved out. Shuttleworth told theguardian in August of 2013 that Canonical wanted to capture 25% of the mobile market in the US and Asia... an absurdly unrealistic goal (to this day Apple has only managed 21% market share according to idc.com) Mobile may be "hot" right now, but they are a no-name brand in that market and they are attempting to go up against companies that can throw 10's of billions of dollars at products, and even take 10's of billions of dollars of losses just to ensure they remain dominant. The ship on mobile has sailed. I applaud their engineering efforts, and I'm sure Canonical employees do very good, and very hard work. But they need to reel it back in and focus. The company can't do everything Mark thinks might be cool when he wakes up in the morning. It needs focus. If Canonical were a startup, and Mark didn't have deep pockets, it would have failed many times over (Mark has acknowledged this several times citing his commitment to Canonical and willingness to re-invest personal capital as necessary). Back to Desktop... there is money to be made there. Several OEM's are struggling, consumers don't like the current options (Windows 8 or OSX). There is a void to be filled, even if it's only 10% of the market, that could result in a huge revenue increase for Canonical. Yes, it's difficult to get into the hardware game, but it could be done. To make revenue, sell support licenses/contracts to OEM's... use the Microsoft model for desktop support. Why is System76 supporting Ubuntu themselves? Canonical isn't getting anything out of that... and supporting the OS costs System76 money no doubt, why not help take it off their hands? The Dell Sputnik? Dell is supporting it directly, and charging consumers more for the privilege of having a "free os" over a Windows license. Over the next 2-5 years Ubuntu could become a common household name, and be no less-normal than installing Windows on your pc. There supporting software is there, the desktop is mature. It just needs someone to guide it in. If Canonical does not want to do Desktop, well I think that's a mistake, but fine. So they should pick one market and do it very well. Don't split-up your resources; there is only a finite amount. |
So Red Hat could buy Canonical? I actually think the resulting company would have an awesome market position (but a terrible challenge to unify their tech-worlds). I think the linux world would be less rich and exciting as a result though. Still it won't happen, because it rather depends on the shareholders of Canonical don't you think? I suspect it wouldn't be as easy as all that to convince them (him!). I saw an article recently suggesting Microsoft should buy Canonical. An even worse idea IMHO - Ubuntu users wouldn't go for that. They might even see Red Hat as a bit too corporate.
Re: Canonical's financials. Which do you want, bigger revenues or profitability? Canonical could be profitable with it's current revenue levels, if it stopped investing in new things (an idea you seem to support, but be careful killing the cloud products if you're after a profit). They could also have tried to make a lot of money from limited utilisation with mandatory support, at a higher price, a la Red Hat - but how would they have competed with Red Hat if they used exactly the same model? Someone, somewhere must have a reason not to do that, don't you think?
Here's another question. Why hasn't Mark Shuttleworth just given up and walked away after 10 years of not making a profit? There's a tendency to look from the outside and assume that this must be a terrible business decision, but I find it dangerous to make assumptions about the motivations and strategies of others, especially those with a track record of success. You might be mistaking ambition for delusion. If you're wondering about Mr Shuttleworth's understanding of the current market place check out these two headlines:
1. http://www.inktank.com/ceph/mark-shuttleworth-believes-ceph-...
2. http://techcrunch.com/2014/04/30/red-hat-buys-ceph-provider-...
Guess what - that means Red Hat just gave Mark Shuttleworth a bunch more cash for his share of InkTank, at a much higher market valuation than he bought them at. Foolish business man that he is. Maybe it's dumb luck. Or maybe Mark Shuttleworth saw the potential and invested in it at a relatively early stage, and even got the thing into Ubuntu and supported it so that customers could get to grips with it painlessly. Two years later InkTank had a decent customer list and Red Hat acquired it to try and gain a foothold (and some control) in the OpenStack market.
Now, the desktop. No one has ever said Canonical isn't going to do Desktop, just that you shouldn't necessarily focus on it as the main source of potential revenue for Canonical. What about those finite resources? Canonical has more resources today than it did 5 years ago, you have to do something with those millions of revenue to stay in the red! ;-) It may still be a smallish company, but it's not the case that Canonical sacrifices one thing to do the other. You'll notices that there are new partners shipping Ubuntu machines , especially in the developing nations - there's a reason for that and it wouldn't be happening if Canonical didn't care about it's desktop. Is Canonical overstretched? Well, it could be, but that's the fight, that's the nature of every start-up, every business perhaps. There are probably people at Apple right now moaning that they don't have enough resources.