This post is in response to http://opensource.com/business/10/5/show-me-money where Red Hat CEO Jim Whitehurst asks “Do you have new ideas of what next-generation business models might be?”
Observe the picture on this post. On the left is a copy of “Free” that I checked out from my local library. On the right a bottle of “Connect” Vitamin Water. What do these objects have in common? They make free pay. So does Red Hat. This post really does relate to open source, so please bare with me.
Glacéau Vitamin Water is a brand of flavored non-carbonated beverages enriched with various combinations of supplements and juice-like tastes. Retailing at about $1.40 a bottle for 20 fluid oz. this drink brand is disrupting both the energy and sports drink markets without a single drop of corn syrup. How do they do it? They do what their customers want. How do they find out what their customers want? For free over Facebook. Glacéau, a child company of CocaCola, as all of the money in the world for marketing studies, television ads, and premium shelving placement. Yet they resort to Facebook?!? Yup, over a series of polls, Glacéau asked their “fans” to tell them what kind of beverage. Glacéau sat back and let their already loyal customers tell them what they are dying to buy through a website that they did not pay a dime to maintain. The side of the bottle carries the typical snarky Vitamin Water style by stating…
we caught you. no use denying it. your fingerprints are all over this bottle. after connecting on Facebook, you voted on the flavor & designed the label—it was great having you do all the work! and since you’ve been so busy pretending not to notice friend requests for about 3 days, posting pics of events (that you’re still at), and clicking through photos of ‘friends’ you barely know (ever get nervous they can tell?), better crack open this bottle. it’s got 8 key nutrients from vitamin a to zing plus caffeine to give you some extra energy… because based on last night’s pics, it looks like you’ve got some serious untagging to do.
Sounds rather gimmicky, but you know what, it worked.
- I bought the beverage
- I found the beverage so tasty, I could not help consuming it all before I got a chance to do this photograph.
- I wrote this blog post, giving facebook and Vitamin Water free marketing.
Glacéau is certainly making free pay. Anyone who has ever read “Free” by Chris Anderson is not surprised.
Mr. Anderson wrote a book named “Free: The Future at a Radical Price” while sitting in coffee shops enjoying free wireless on a netbook running Ubuntu. He writes about everything from that free cereal box toy to the Free Software Foundation. Heck, if you do not want to buy a book called “Free,” Google has you covered. Either way, Free is a best-selling book. While I type this book gets yet another no-cost plug.
So, what does Vitamin Water and “Free” have in common? They give away control to their user, in return the beverage company and the publisher get labor that they did not pay for.
In several ways, Red Hat already plays the free game well. Out of Fedora’s 21,676,499+ users, if only a 1/100 of a percent ever contribute any content that lands in Red Hat Enterprise Linux, it is a win for Red Hat. It also behooves Red Hat to pay attention to CentOS’s rpm repositories when rolling up the latest updates. As far as I know, Red Hat pays nothing to the CentOS project yet Red Hat can use CentOS as a product development source.
Red Hat also plays the other side of the free coin while cashing out. By partnering with many OEMs, hardware manufacturers only pay for the units they sell for vendor-UNIX-quality operating systems. Indeed, Red Hat’s market share and profits in 2010 look bright.
The only thing I would advise Red Hat to do better is to market products to their fans, not just the consumer market. Red Hat’s merchandise store is cool and I already own the ladies pullover. I would not mind a free steel drink bottle. Hint! Hint! Seriously though, I miss the day when Red Hat had boxed sets which were sold in stores. Red Hat 7.1 was the coolest because they included a CD jam-packed with Loki Games. Red Hat could get involved in selling game keys today. Without the costs of creating media, it would be a practically free revenue source for Red Hat that fans would enjoy. Put it together with Fedora Games Respin, and Red Hat would have a very large collection of games just a yum away. All it would take is one killer game and all of the buzz will be about some new gaming system. Before you know it, DiY gamers will be asking systems-builders to ship with Red Hat Enterprise Linux Desktop.
Companies must embrace free now or else they will lose market share in 2011.