Open source makes sense in a recession

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Open source makes sense in a recession

Cliff Saran

"The downturn is good for open source software," says Red Hat chief executive Jim Whitehurst.

Red Hat, whichmakes money selling services rather than software, says itis experiencing higher demand for Linux in the downturn. Its revenue last year was $500m and it is growing 30% year-on-year.

"We have an embarrassment of opportunities. In a difficult economy our message sells well," says Whitehurst.

Since open source companies do not rely on revenue from customer software upgrades, Whitehurst says users are not forced into upgrading or buying extra functiuonality they do not require.

"With the Red Hat business model, when we add new features it is just code update under subscription, so it is not a revenue stream for us. This means that the customer gets the functionality its business needs as part of the normal subscription cost."

Whitehurst claims that users who have migrated from proprietary software to open source have experienced dramatic cost savings, while improving the performance of their IT systems.

Why open source is cheaper than commercial software:

• No licence fee for the software. You only pay for IT support and services.

• There is less of a need to upgrade because the supplier makes money on services, not software.

• Open source software is based on industry standards, which may provide ways to lower costs.

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