Hackers and Magicians: Red Hat, Inc. and the Big Business of Free Software

Abstract

Red Hat, Inc. is a prominent software firm that seems rife with contradiction: It brings in more than $1 billion of revenue each year despite giving away its software for free. It trumpets open innovation and promotes its products as alternatives to proprietary software, yet it owns hundreds of patents. It was born from a movement of hackers, but it has grown increasingly corporatized over time. Combining publicly available financial statements, interviews, newspaper reports, scholarly sources, and nearly a dozen new oral histories from current and former Red Hatters, this thesis explores Red Hat's transformation over time and its place in the world of open source software. Red Hat's growth has not been magic, but rather a reflection of its ability to capitalize on commons-based peer production, navigate and develop solutions to business and legal hurdles, anticipate market shifts, and develop its brand, and promote its value proposition. The Red Hat case is a window into the challenges faced by companies as they develop and grow, the history and possible future of open source software, and the opportunities presented by open source production in an increasingly networked world.