Red Hat's $1B milestone notable but chump change vis-a-vis overall Linux industry

The Linux Foundation's exec director saluted Linux distribution leader Red Hat for reaching $1 billion in revenues but pointed out that the overall Linux industry is worth many, many billions today.

In a recent post, LF Director Jim Zemlin said the "collective investment" in Linux, at $10 billion, is freely available and that the resulting "network effect" has generated billions of Linux users and billions of dollars transacted on Linux systems daily.

"This achievement will finally put to bed the argument that "nobody can make money with open source," Zemlin wrote last week, just prior to Red Hat's earnings were announced. "Credit where credit is due: Red Hat has worked extremely hard and extremely smart to leverage open source to make a billion dollars ... but even more significant to Red Hat's future prospects is the virtuous cycle that they now participate in. Platform economics have always been dominated by network effects ...  Red Hat however, benefits from a different kind of network effect. A network effect centered around innovation."

Zemlin also noted that Facebook used Linux to build a company worth $100 billion.

"Since Linux has grown, so have the benefits Red Hat receives (and gives to others)," Zemlin wrote. " When Facebook contributes code to make their data centers more efficient, Red Hat benefits; when Red Hat contributes code to improve file systems, mobile device makers benefit; when mobile device makers contribute code to improve power consumption, super computer cooling costs go down; when super computer users contribute code to make Linux faster, Wall St. benefits with faster trading systems -- and so on and so forth. So you can see that the positive feedback loop that is represented in the billions of figures above shows no signs of slowing down. Congratulations to Red Hat but also to all Linux users and ecosystem members who participate in this virtuous circle."

Exactly how much?

Probably impossible to pinpoint. Still, IDC recently noted that Linux server hardware revenue for the fourth quarter of 2011 alone was $2.6 billion.

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