Red Hat tries the value argument for open source

A shift from marketing lowest cost to highest value is a welcome change that could also affect how IT selects open source

Red Hat released Red Hat Enterprise Linux (RHEL) 6 earlier this week. The new operating system, filled with technical innovations, performance enhancements, and customer-requested improvements, has met with positive press, as well as solid customer and partner response. However, how it's being marketed could be much more important -- to customers and to open source vendors in general.

Leading with lower cost

According to IDC market share figures, Red Hat is the undisputed leader in the enterprise Linux market. Red Hat achieved this position, with the help of partners such as Dell, IBM, and Hewlett-Packard, largely on a simple message of "lower cost."

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In the past, RHEL was not as feature-rich as Unix variants or even Microsoft's Windows NT and Windows Server product line. Yet the "lower cost" message was powerful enough to encourage customers to adopt RHEL in areas where its features, or lack thereof, didn't impact the operating system selection process.

As an example of that dynamic, in October 2008, Red Hat CEO Jim Whitehurst told Computerworld, "I've had a couple of conversations with CIOs who said, 'We're a Microsoft shop and we don't use any open source whatsoever, but we're already getting pressure to reduce our operating costs and we need you to help put together a plan for us to help us use open source to reduce our costs.'"

The low-cost glass ceiling

At the time, in response to this quote, I warned that the focus on low cost risked unnecessarily limiting the growth of open source businesses. I also wrote about Red Hat's revenue glass ceiling as being directly attributed to its primary focus on lower cost: "Yet, Red Hat's business model, which focuses on low cost, has trained its customer base to fixate more on the price of Red Hat products than the value these products deliver. It encourages customers to trade RHEL for cheaper options."

A renewed focus on high value

It seems Red Hat has learned that lower cost is important, but higher value is much more vital to customers. I'd like to say, "I told you so," but that wouldn't be very Canadian of me.

Look at RHEL's marketing today, and the title reads: "More reliable. More open. More comprehensive." A search for the term "cost" returns zero hits on the RHEL for Servers marketing page.

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