Novell's Link to the Microsoft TCO Linux Message

Stephen illustrates (via this post) something that I’ve tried to put into words several times on my blog. His picture does a really good job of getting the idea across though. From the post:

Red Hat began messaging at least a year ago around the use of Red Hat linux in value creation. Here’s how the logic flows from a Michael Tiemann presentation at the 2006 Red Hat Summit:

* Companies spend on average 4-8% of income on IT (Financial companies 8-12%)
* So regardless of how you carve up the cost savings, you’re messing around with something that will NOT move the stock price anytime soon.
* IT focusing on the value creation side of the bar can help by delivering better customer service (and retention), market growth, competitive advantage.

It’s a difficult realization for some, but “being cheap” is not what makes Open Source great. Yes, the cost proposition is often compelling… but it’s the value proposition that I usually find remarkable. This sort of reminds me, although it’s a different situation, of some of the Oracle messaging around their Linux release. The major push seemed to be around cost savings. They didn’t see the irony of a company selling 6-8 figure database solutions offering 3 digit saving on an OS. An additional 1% additional off the DB would always be more. Where’s the value in that?

–jeremy

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