Computers and the internet: general overview

Business Internet

Dot.com Comparison of a Leader and an Upstart

Red Hat.com vs. Microsoft.com

Two prominent dot.com companies within the same industry of recent note may be found in the competing personages of Red Hat Software and the successful brand name of Microsoft. Although Red Hat Software is not nearly as well-known as the Titanic brand name of Microsoft, it offers an interesting and different software business perspective to Microsoft's better-known strategy business. Of course, it should be noted that, as Red Hat is the world's premier open source and Linux provider that it is not exactly tiny in its stretch as a company. However, it does not have nearly the status of industry leader as Microsoft, or, more importantly, that company's well-known status as a brand name and purveyor of technology and software.

Microsoft's business strategy is in line with many typical technological vendor models. It attempts to generate business by essentially making its products indispensable to networks. It is a proprietary software company that users must pay for, and continue to update through its websites. Once a network becomes 'locked into' or essentially, hooked into using Microsoft, it is difficult to extract itself from the system and adapt to another one. By making it very difficult to change from Microsoft to something else, even if something better or cheaper comes along, Microsoft creates a need in those who use its technology on a professional as well as on a personal basis.

In contrast, Red Hat is a nonproprietary software firm in contrast to Microsoft Corp.'s proprietary technology such as Windows.

As a kind of caution to current and potential investors surfing its website, Red Hat stresses that its choice of an open source software business model does not mean free and open as in without cost -- but open source does mean that the software is free as in no company can fully own it.

Companies must pay to purchase Red Hat software, thus generating revenue for the software dispensing company. But unlike with Microsoft, the company using Red Hat's Linux technology is not locked into the model, meaning that the software is potentially compatible rather than incompatible and gives users additional freedom not present in Microsoft's proprietary model.

Almost like an environmentally-friendly company, the introductory page to Red Hat's website stresses its unique mission, culture, and corporate climate as the 'anti-Microsoft.' Red Hat has proved itself, because of its non-proprietary nature, to be extremely attractive to non-profit businesses, universities and governments, as delineated upon its website and also in its offering assistance to those wishing to utilize the technology. In contrast, Microsoft, rather than stressing its intrinsic company philosophy, emphasizes the ease of use of its software for the average individual, and also its wide-ranging expanse of products. Unlike Red Hat, which tells the story of its founding and gives information about the doings of its various corporate staff, Microsoft has the luxury of simply assuming market dominance, of not having to make a case for itself. Instead, it includes links to programs that can be helpful to its (Microsoft-only) users, such as how to use Microsoft Internet Explorer, and advice from the Microsoft trouble-shooting staff, like how to rid one's computer of the My Doom virus.

According to Red Hat's founder, in a speech quoted on its site," The open source model is built not on the power to lock-in customers, but consistently serving them through extraordinary value, flexibility, and ease of integration and management. Will it be as financially lucrative as a software monopoly? No. Will customers more appreciate and realize its value, and therefore become better customers? Absolutely."

As inspiring as the message of Red Hat is, however, it remains questionable if simply by offering a better product, a technology company can secure dominance upon the market much as one might, in a grocery store, be apt to choose a more cheaply priced soap, for example, as opposed to a more expensive one. Once one has committed one's self, and one's company to a particular system, it is difficult to retain one's self and one's staff with any great ease. The ubiquity that Microsoft has assumed within the industry, and is maintained through the ease of accessing its website and maintaining its technology through updates means that it is difficult to switch what one uses, even if one wishes to, on a moment-by-moment basis when it comes to software. Thus, the Red Hat business model may be somewhat questionable in the very long run, although it has proven reasonably competitive in the short run -- albeit not as competitive as Microsoft.