How Can Red Hat Be Worth More Than Sun?

by Sam Dean - Jan. 21, 2009Comments (5)

Matt Asay notes a milestone today: Red Hat is just about to surpass Sun Microsystems in market capitalization. At the moment, Sun's market capitalization is $2.69 billion and Red Hat's is $2.61. If the trends in share prices for these two companies continue, Red Hat's market cap will soar right past Sun's. Does this make any sense?

The valuations of many public companies in America make very little sense at the moment, and there is some nonsense in the valuations of both Sun and Red Hat. Back in November, I questioned the valuations of both of these companies, based on the fact that they sold for approximately the amount of cash they both have.

Since that post, Red Hat's share price has nearly doubled, while Sun's has fallen. The main difference between the performances of the shares came from Red Hat's continuing success with its model of getting revenues from service and support for free software. Red Hat just turned in yet another sterling quarterly financial performance.

And so it goes in this bizarre economy. Sun's revenues are over $13 billion compared to $627 million for Red Hat. Sun has far more IP, a more vast patent portfolio, more history, products positioned in good categories, and a solid open source strategy. It doesn't have good earnings, though, or positive buzz. It's cheap enough to be an easy acquisition target. And so it goes...


Browse Blog

Dawn Giorgio uses OStatic to support Open Source, ask and answer questions and stay informed. What about you?



5 Comments
 

@anonymous, it is a rhetorical question dude.


http://en.wikipedia.org/wiki/Rhetorical_question


0 Votes

What's that, the market not acting rationally? Say it ain't so, Ayn Rand!


0 Votes

I can answer this.


An experienced Linux admin cant go from LInux to Solaris with out reading a lot of documentation.


Sun has two kinds of documentation. There is the documentation available on the website and the documentation that the techs have that they are not allowed to give you which drastically speeds things up and is far more understandable.


Patching is still a pain on Solaris 10. Furthermore, the package management system is difficult (or lack there of). Picture slackware, but harder to use. The update Gui app in Solaris 10 is not recommended by Sun support even though it is installed in Solaris by default. Updating a sun box is like launching a space shuttle compared to Linux. Once they improve the package management system (ie switch to something like apt or yum) the Sun world will be a better place and there sales might go up.


It is a pain to support an enterprise sun environment without paying out the nose for support, even if you are an experienced Linux admin and/or have spent over 40k on servers and workstations.


The support sun does have is a real pain to use. The techs are split into different departments depending on what they specialize in. These guys know there stuff. The on-site techs also know there stuff. However, with the addition of the new VP at Sun, and his changes to the way support works, you can expect to spend hours on the phone, even the Sun employees are complaining about this.


Why would I want to buy a sun with all of that if I do support in house. I wouldn't, because I am forced to use Sun Support when I do.


0 Votes

It makes absolutely perfect sense. This is based on my feelings of the quality of Solaris (inc OpenSolaris) and Red Hat Enterprise Linux. Linux is growing very well and Red Hat are strong, well known with a good history and poised to continue to grow and, well, Sun Microsystems is still deciding what to do or open source regarding it's product. Solaris is the best implementation of Unix I've seen but hell, Unix has been dwindling since Linux came along. Only open source UNIX systems can possibly stay cutting edge and competitive these days and every day Sun wastes deciding what parts to open source and what licenses to use the company grows weaker. They never really made that _much_ money of Java in the end did they? So they might be caught between short profits and uncompetitive OS if they open source like they open sourced Java.


0 Votes

It makes absolutely perfect sense. This is based on my feelings of the quality of Solaris (inc OpenSolaris) and Red Hat Enterprise Linux. Linux is growing very well and Red Hat are strong, well known with a good history and poised to continue to grow and, well, Sun Microsystems is still deciding what to do or open source regarding it's product. Solaris is the best implementation of Unix I've seen but hell, Unix has been dwindling since Linux came along. Only open source UNIX systems can possibly stay cutting edge and competitive these days and every day Sun wastes deciding what parts to open source and what licenses to use the company grows weaker. They never really made that _much_ money of Java in the end did they? So they might be caught between short profits and uncompetitive OS if they open source like they open sourced Java.


0 Votes
Share Your Comments

If you are a member, to have your comment attributed to you. If you are not yet a member, Join OStatic and help the Open Source community by sharing your thoughts, answering user questions and providing reviews and alternatives for projects.