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Embedded earnings down, but turning around, at Red Hat

Mar 31, 2005 — by Henry Kingman — from the LinuxDevices Archive — views

Red Hat netted more money selling subscriptions for embedded products than from retail sales, during its most recent quarter, according to its fourth quarter and annual report for fiscal year 2005, filed today. However, both retail and embedded subscriptions were down, generally, while enterprise subscriptions doubled year-over-year.

Red Hat's retail-related revenues for the year fell from $13.5 million in 2004 to just $1.9 million in 2005, as a result of having discontinued its desktop-oriented Red Hat Linux product line.

Embedded revenues from subscriptions fell slightly for the year, from $1.9 million in 2004 to $1.8 million in 2005, while embedded service revenues dropped from $4.6 million to $3.0 million. Combined embedded services and subscriptions fell from $6.5 million to $4.8 million for the year, a 26 percent drop overall.

Red Hat discontinued its embedded-specific Linux distribution in April, 2002; however, the company took a resurgent interest in embedded in 2004, announcing a high-profile “devices-to-desktops” partnership with embedded giant Wind River in May of last year, and launching a program in October to market RHEL (Red Hat Enterprise Linux) as a runtime for embedded development. These moves may be paying off, as Red Hat's embedded subscription revenues rose from $309,000 to $518,000, year-over-year, for its most recent quarter.

Meanwhile, Red Hat's annual enterprise subscription revenues doubled, year-over-year, rising from $67 million to $147 million. The company's enterprise service revenues also grew, but more modestly, from $38 million to $42 million annually.

Red Hat's unaudited figures suggest that embedded accounted for 5.2 percent of its earnings in 2004, dropping 0.5 percent in 2005. For the sake of comparison, competitor Microsoft's embedded-related earnings rose 46 percent, for the quarter ended Dec. 31, 2004, and accounted for 0.8 percent of its earnings overall, according to

A full earnings table of Red Hat's fiscal quarterly and annual report can be found here. Report highlights are here.

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