Thursday, February 5, 2009

Canonical half as revenue efficient as Red Hat, per person

Canonical is the company behind Ubuntu Linux.

Recently, Canonical's CEO gave some indications of their annual revenue (about $30 million/year). As Canonical is a private company, there hasn't otherwise been a lot of financial information forthcoming. However, it's estimated that Canonical has 200+ employees.

This makes for an interesting opportunity to compare revenue efficiency on a per-employee basis with Red Hat (RHT), a competing public Linux company. Red Hat has approximately 2200 employees and its estimated 2009 revenue is 653.65 million dollars. I love this as a first order comparison between direct competitors to see how efficiently companies generate revenue.

That would put Red Hat at ~300K dollars per employee and Canonical at ~150K dollars per employee, or only half. To add some perspective, Microsoft rakes in ~676K dollars per employee. To be fair, Canonical is a younger company, and has likely made investments that will need time to play out on the revenue front. What I can say is that at the bottom end of the Linux commercial spectrum, a trend is that some customers tend to opt for supporting themselves with their own IT departments. I wonder sometimes if Red Hat loses more on the bottom end to CentOS than Canonical earns, due to this trend.

As Android ramps into the netbook space and beyond, I think it'll grab more Linux desktop market share. A co-Linux strategy might be a good thing for Linux desktop vendors, providing the native Linux apps that Android doesn't have. But it's not clear to me what course Canonical has set, with Android invading the desktop, and their server business being lower on the totem pole than Red Hat's. Canonical will have to scale much bigger to capture any real share of the server business.

Fwiw, I use Ubuntu (and others) myself, and worked for a Linux distro before. It's a tough gig. But I like the community element of Ubuntu; it's a philanthropic success in any case.

Disclosure: no positions

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