October 6, 2006 4:00 AM PDT

Canonical seeks profit from free Ubuntu

If you want to understand Canonical's Linux business strategy, think Red Hat 2000.

Canonical is the 65-employee start-up behind a popular version of Linux called "Ubuntu". The company is betting that it can win a place in the market using a strategy that dominant Linux seller Red Hat has dropped.

Red Hat offers two versions of Linux: Fedora Core and Red Hat Enterprise Linux. Fedora Core is free, but relatively untested and unsupported by Red Hat, while RHEL is supported and certified, but must be purchased. With Canonical's Ubuntu, however, the free and supported versions are identical--the approach Red Hat abandoned in 2003.

"We believe that Ubuntu should be free to everyone--not just a trial version, but our very best version," said Christopher Kenyon, Canonical's business development manager. The South African company even ships free CDs anywhere in the world. Using that strategy, it expects profitability within 24 months, he added.

Ubuntu has become popular among enthusiasts, though measurements of this are hard to come by; the most oft-cited statistic is Ubuntu's long-standing top placement at Linux version tracker DistroWatch. Canonical is counting on converting that popularity into business, and competitors should take note.

"If I were Red Hat or Novell, I would be watching Canonical's moves very closely," said The 451 Group analyst Raven Zachary. "It has the buzz in the open-source community that Red Hat had in the late 1990s."

Down-to-earth Linux
Canonical, founded in early 2004, is the brainchild of Mark Shuttleworth. In the years before Canonical, Shuttleworth founded security firm Thawte Consulting, sold it to VeriSign for $575 million and rode a Russian rocket to spend eight days in orbit at the International Space Station.

The company has built a certain whimsy into the Ubuntu project. Product names are one example: The first version, Warty Warthog, arrived in 2004, followed by Breezy Badger and Hoary Hedgehog in 2005, and Dapper Drake in June 2006. If the project makes its schedule, expect Edgy Eft to arrive this month.

And Ubuntu's name takes the open-source movement's feel-good collectivism to a new level: the African word translates to "humanity to others" or "I am what I am because of who we all are."

But the company has button-down business intentions. Dapper Drake was the first Ubuntu version with long-term support from any source--five years for the server version and three for the desktop, compared with 18 months for regular Ubuntu versions.

Ubuntu has largely been a desktop computer phenomenon. Shortly after the Dapper Drake launch, however, Canonical began advertising its Ubuntu server version as well.

"We started the campaign in August as part of an awareness drive about Ubuntu on the server," Kenyon said. "People typically think of Ubuntu on the desktop, and even members of the broader technology community are unaware of the growth of use of Ubuntu on the server."

"I'm actively contemplating installing (Ubuntu) for a few friends and family, because I'm sick of de-spywaring their Windows machines."
--Stephen O'Grady, analyst, RedMonk

The desktop software has attracted fans. Among them is Linux user and RedMonk analyst Stephen O'Grady. "It's quite impressive," he said of Ubuntu, citing easy software installation, a thriving community of users and a clean, simple design.

"I'm actively contemplating installing it for a few friends and family, because I'm sick of de-spywaring their Windows machines," O'Grady said.

Canonical is donning the trappings of traditional software companies: It's seeking certifications that Ubuntu works with other products, and database giant Oracle has working to ensure its Oracle 10G Express version works on Ubuntu, Kenyon said. It can't yet supply client references, but it has customers among technology companies, financial institutions, start-ups, governments and schools. In addition, the company has a support staff based in Montreal.

Canonical charges $250 per year for PC support during business hours and $2,750 per year for round-the-clock server support. In addition, a number of business partners also offer support, Kenyon said.

That hybrid-support approach means it's not clear that Canonical will get the support revenue, Zachary said. "Will Ubuntu follow the example of Apache Web Server or JBoss? With the Apache Web server, expertise became distributed quickly within organizations, and revenue opportunities were relegated to individual consultants," Zachary said. "With JBoss (application server software), revenue opportunity consolidated around JBoss, which is now part of Red Hat."

Add a Comment (Log in or register) 59 comments (Showing first 20 comments)
Because LINUX is so crap and hard to use that you have to pay for support.
by richto October 6, 2006 5:25 AM PDT
That is hardly surprising as LINUX is so crap and hard to use that you have to pay for support to be able to use it in a consumer or business environment. Not to mention all those zillions of security patches to try and keep up to date with. No wonder its still less than 1% of the desktop OS market...

Have to compile software before you can run it? what a joke...
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Linux is nice but very centralized
by Blito October 6, 2006 7:16 AM PDT
Linux does offer patching thorugh it's patching network just like Windows on a regualr basis. The patching is just the same and they do patch their apps more because they are free updates of course. I sometimes don't like the idea od Betaware in the database but Ubuntu seems to keep the install and uninstall clean enough, and I think they state if the product is unfinished or beta. Betaware can mess up, for instance, if your running a deathmatch video game.

I don't prefer messy config directories in the home directory in Linux and wish they would separate the Documents a little from the 'lowercase' odd looking config folders. Plus I prefer Windows commands than UNIX since UINIX can feel more managed. You are forced to rely on the way they organize their dependacies and their centralized structure can feel like your part of a school or government library sometimes

As far as running high end graphics solutions like games and simulations, The Playstation 3 does it just fine it seems since it's using Linux. Can that work in a sometimes messy Linux machine for everyone in the mainstream? I prefer open source but not sure about Linux.
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Ubuntu taking desktops by storm
by lonewolf367 October 6, 2006 7:33 AM PDT
I myself run Mac OSX and Fedora Core 5 on my home systems. I have installed Ubuntu on 5+ friends computers, most of which are total computer novices using Windows XP Home. They have since helped others install and spread ubuntu around and have had no issues using it. They quickly adapted and with the great package manager support finding and installing software can't possibly get easier.
Since my friends aren't nerdy they don't compile software or play in the terminal and they get around perfectly fine. I hope to see more make the switch since its far easier than Windows if you wan't it to be but also gives you tons of depth satisfying power users as well.
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I wish them well but...
by Hoser McMoose October 6, 2006 7:48 AM PDT
I do hope the Ubuntu folk succeed, but I think they're going to be fighting something of a losing battle. Ubuntu seems most successful in the desktop market, and people just aren't willing to pay for support for desktop systems. Even for Windows were MS chargest $100+ they provide virtually no support. Buy an OEM computer with Windows and you get a whole 15-30 days worth of support and that's it. People might complain beyond that point, but they aren't willing to pay for continued support.

Beyond the fact that few people are willing to pay for support, Ubuntu are fighting against themselves with a sort of two-edged sword. People only need support when things aren't working properly, but if things don't work properly then people aren't going to want to switch to this OS.

As for me, I've downloaded and installed Ubuntu. It is VERY easy too install and use, almost trivially so. However it wasn't flexible enough for my needs. But I'm something of a computer geek, and this is definitely not an OS for geeks, it's an OS for those who want something that JUST WORKS.
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There's far more money supporting Windows - because it needs it.
by technewsjunkie October 6, 2006 7:50 AM PDT
The Windows "support" industry is HUGE because Windows has a
lot of problems.

No wonder Windows bigots defend it - they are being financially
supported by it! How many own MS stock?
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I can't believe people fall for this.....
by Jim Hubbard October 6, 2006 10:36 AM PDT
Mark Shuttleworth has successfully built an image of caring about the public and putting out Ubuntu in an almost Robin Hood fashion.

They continue to build thier image on "FREE (as in beer)" software. But, if your free beer is flat, you simply ask and get another one - FREE and you don't have to pay the bartender to help you fix your flat beer.

If Ubuntu falls flat, you have to pay for the "free" help to fix it.

Ubuntu is not the grandfatherly helpful OS you have been led to believe. It is a fantastic marketing ploy for a person looking to build on his multi-million dollar fortune.

Mark Shuttleworth has played people for suckers, and (knowing people like I do) he'll probably make a killing at it.

Hey, Mark! Not only should software be free, it should be simple enough to use that you don't have to pay a multi-millionaire to help you run it.

This is like a doctor advertising free medicine for everyone, then charging you for the prescription that tells you how to take it or waiting until you take too much and charging you to help get you through an overdose.

Of course, you could just take the meds and guess at how much and when to take them. Or, you could look online for how much of a medicine to take, how often to take it, what side effects to watch for and what NOT to take with your meds. Sure....that sounds like fun!

So go ahead! Take your Ubuntu.....but you'd better have a degree in Linux or get ready to pay Dr. Mark Shuttleworth to help save your data.
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I unstalled it last week
by October 6, 2006 10:43 AM PDT
Definately the nicest GUI I've seen in a linux distribution. It'd certainly be suitable I think for casual computer users. Connected out of the box to the windows network, too. But shiny GUI and all, simple apps such as the file browser, while better than they were a few years ago, still seem a bit unrefined compared to their windows counterparts.

One thing I dont like about ubuntu is the default 'root-less' approach. Though you can change that easy enough.
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Rough Around The Edges, Brittle
by maxwis October 6, 2006 12:06 PM PDT
I spent a significant number of hours installing and configuring Dapper on both a desktop and laptop computer, and later Edgy. With the exception of a driver for my laptop's wireless card, it basically "worked" out of the box. But it took way to much trial and error to get things like Java to install. Once I had Java installed, I had to muck around some more to get a symbolic link from Java to Firefox so Firefox would recognize the plugin.

You'll be at a disadvantage playing multimedia files in Ubuntu because of codec licensing restrictions. Forget about playing Quicktime files, Apple has no port of Quicktime to Linux. Need to search for a file? Nautilus search is a joke. Install Beagle to have a decent search? Go ahead, you won't be able to search based on file dates or file size, basic things you can do and expect to be able to do using Windows file search. Need drivers for hardware to access advanced capability? Good luck. ATI has no Linux driver for my All In Wonder card. I have video support but no TV tuner support.

In its present form, Ubuntu is not suitable for the mainstream consumer. If Shuttleworth thinks he can crack that market then he will have to dump a ton more money into the product. Ubuntu does work for the IT pro and for the hobbyist who has time on his hands and likes to tinker. The tinkering got old for me when I just needed to get something done and tired of having to do online searches to find out how to do stuff, and then go through trial and error to make it work.
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you want fre RHEL with online updates use CENTOS
by zolyfarkas October 6, 2006 3:41 PM PDT
http://www.centos.org/
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you could be the next us president
by zolyfarkas October 6, 2006 3:54 PM PDT
sounds like your qualified :-)
Reply to this comment
errr... what about a mac?
by cubicleslave1 October 6, 2006 4:29 PM PDT
Mac OSX is pretty, is solid, and just works right out of the box. It has a very nice GUI. It is a great platform for performing all manner of multimedia tasks, using software that comes with it. It is very user and idiot- friendly. It may not have as much application support as the sum total of all Linux applications, but it definitely has more than any single flavor of Linux. It is not bullet proof, but is still an inherently more secure design than Windows, due to the lack of a registry, and the fact that windows allows all manner of crap to be bound into its kernel. And Mac OSX is founded on bsd unix. In short, it is everything that Linux is aspiring to be, and has aspired to from day one, but will never become, due to the apalling process of balkanization it has undergone over the years. I cannot emphasize this last point enough. So why not just use mac os X, and get on with life?
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original stuff
by amyjiangsu October 7, 2006 6:32 AM PDT
Chris made it very clear that Canonical will be seeking sustainability in its original way. Ubuntu Linux is the product of innovation, the way to market Ubuntu would innovative and original too!
Reply to this comment
original stuff
by amyjiangsu October 7, 2006 6:33 AM PDT
Chris made it very clear that Canonical will be seeking sustainability in its original way. Ubuntu Linux is the product of innovation, the way to market Ubuntu would be innovative and original too!
Reply to this comment
Inaccurate information
by waynetalb October 7, 2006 12:24 PM PDT
Canonical is not a South African Company. It is registered in the Isle of man (www.canonical.com) In fact very little of Ubuntu is managed from South Africa. Mark Shuttleworth now has his primary residence in Europe.
Reply to this comment
So far...
by Mendz October 9, 2006 3:37 AM PDT
... the real successful business model for Linux is exemplified by Red Hat's practices. Eventually, I think most Linux distros should follow suit.

Offering a Linux version for free is really just a way to help "widen the playground" so to speak. But even so, consumers are usually not buying -- most of them in to it for the fact that Linux is free. Eventually, widening the playground is really just a popularity game. After that, reality sets in and you need real cash flowing in.

So for serious earnings, Linux distros are left with no choice but to either get corporate or government accounts. Hopefully, even that is not tough for Linux.

The business side of supporting a free product can hit hard...
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Opportunities outside the US
by twasserman October 9, 2006 7:24 AM PDT
c|net's article focuses on the business situation in the US. It's a big world out there, and lots of people and companies would prefer not to send their software dollars to the US, home of Microsoft, Novell, RedHat and Oracle. Canonical can build a successful business without having a single paying customer in the US. By the way, Mark Shuttleworth's current home is in London, though he seems to spend most of his time traveling to support the work of his foundations (http://www.shuttleworthfoundation.org) and to promote Ubuntu.
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It's not free?
by Seaspray0 October 9, 2006 7:26 AM PDT
From the story: "Red Hat offers two versions of Linux: Fedora Core and Red Hat Enterprise Linux. Fedora Core is free, but relatively untested and unsupported by Red Hat, while RHEL is supported and certified, but must be purchased."

RHEL is not free? How does this not violate the GPL? Is this the only version of linux that isn't free? What is the cost/licensing? If you wish to run an enterprise server on linux, is this your best option (are there alternatives that are free and widely used that are as good or better)? I'm looking for honest answers, please.
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the commercialization of Linux provides an...
by i_made_this October 9, 2006 11:10 AM PDT
...excellent opportunity for some shrewd OEM to pre-install it as a significantly cheaper and more secure option to Windows. All the OEM needs to do is provide the Linux o/s plus guarantee on-going live support like Canonical's doing for an allin price of $250. Mike Hell certainly has given up guaranteeing the integrity of Windows - he can be equally casual with Linux and sell more PC's at a lower price point. But I sense another OEM will beat him to it.
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Still needs work
by lab4rn4 October 9, 2006 8:36 PM PDT
I recently installed ubuntu, I chose ubuntu because I'm still a full windows person so, ubuntu is kind of a for dummies version of linux, but still needs a lot of work, the hardest thing to get used to on linux is installing software, you have to compile it yourself??? what's up with that?? I think that just by fixing that, making auto-installers more available it would gain a hell of a lot more popularity because to a normal user there'd be absolutely no difference between ubuntu and windows.
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Ubuntu Linux isn't from South Africa.
by angrykeyboarder November 7, 2006 10:51 PM PST
It's from the United Kingdom.
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