Two stories appeared today that are worth talking about. One deals with Apple and its success in the market place. And one deals with Linux. They each have different marketing models, and each is successful.
Let’s take Apple for starters. Their sales and growth numbers could continue in the same direction for the next two years and thereby making them a $200 billion giant that could eventually dwarf the revenue of tech companies like IBM and Hewlett-Packard. Why not? Despite the fact that many companies are copying Apple’s hardware and software sets, none of these other companies are as original as Apple. Let’s face it, which is original, the iPhone or Windows Phone 7, or Android?
One prevailing notion is that Apple’s hardware successes with the iPad and iPhone has created a cycle where the same customers buy applications in the App Store, and then continue to buy Apple’s products to keep using the software. So the customer buy’s one piece of hardware and then continues to buy more than one App. So this is a notion that makes sense.
Next is Linux. Here is a company that basis itself on free software. And according to analysts, Red Hat delivered a strong fourth quarter and is on track to be the first pure play open source company to hit $1 billion in annual revenue.
So here are some of the figures. Linux reported fourth quarter net income of $33.5 million, or 17 cents a share. Non-GAAP earnings were 26 cents a share for the fourth quarter was $244.8 million, and this was up as much as 25 percent from a year ago. Red Hat’s earnings were boosted by 2 cents a share due to a research and development tax credit. Wall Street was expecting earnings of 22 cents a share on sales of $236 million. For the year ended Feb. 28, 2011, Red Hat reported net income of $107.3 million, or 55 cents a share, on revenue of $909.3 million, up 22 percent from a year ago.
Now that is from a company whose model is based on the open-source, “Free Software” installation. Actually all of us know that the “free” part is the open-source code. Great is you want to rewrite the code yourself and create your own OS. But otherwise, Linux sells it’s own product which it wraps around the Open-source code. This way it says it is delivering a free product, but actually it sells its own configuration of the shell around the open source code.
So you have two companies that make significant revenue based on different models of performance and expectations. It may be something that other tech companies could learn from.