Red Hat

Red Hat's CEO finally "gets the joke"

Jim Whitehurst is hitting his stride as Red Hat CEO, and does himself proud in this excellent ZDNet interview. Whitehurst was COO at Delta Air Lines prior to joining Red Hat, adding credibility to his take on the enterprise software game:

I was a senior exec, and like every other senior exec I had a huge IT budget. Mine was as large as Red Hat's revenues last year. You sit there and say, "Why are my IT costs going up, but I'm getting less and less functionality?" Every IT professional says the same thing: my lights-on costs are going up. But wait a minute! I bought a laptop, and it cost me half as much as it did three years ago, and my costs are going up? I get the joke now.

If you look at the S&P 500, seven of the top twenty companies are tech, and other than Google, they're not high-growth. But they're just printing money because switching costs are so high. There's this incredible amount of residual goodwill to Red Hat because we're seen as an alternative to that. Oracle announced a 20-something percent price increase just as the economy starts heading south. How can you do that unless you're pretty sure nobody can switch? High switching costs led to infrastructure cost creep. Once you get hooked, you can't get off.

Bingo. In the case of Oracle, industry consolidation has put it into a position of such power over its customers that it has killed off much of its competition. IBM and others have done the same. Enterprises now get to choose between competing behemoths that have little incentive to lower prices.

Open source (and SaaS) may well be the only hope of bringing back meaningful competition to the enterprise software game. The problem, however, is that open source still lacks one trait that enterprise buyers, given their druthers, strongly prefer: Largesse. Who in open source can provide that security blanket?… Read more

IBM continues to feed Novell with Cognos rollout on Suse Linux

IBM has long looked to Novell to serve as a buffer to Red Hat's growing dominance.

Years ago, IBM invested $50 million in Novell. More recently, IBM selected Novell's Suse Linux Enterprise for its Cognos 8 mainframe debut. A Red Hat Enterprise Linux version is planned for the future.

The choice of Linux was easy: 20 percent of IBM's System z growth stems from Linux, and Linux is easier to develop. According to an article in SearchEnterpriseLinux.com:

Cognos was able to fast-track porting the application to System z because it was already available for IBM Systems … Read more

Red Hat's patent deal: Proof that the GPL works

A few weeks ago Red Hat reported that it had reached a groundbreaking patent deal with a selection of patent trolls that put the community, not Red Hat, first.

"Typically when a company settles a patent lawsuit, it focuses on getting safety for itself," said Rob Tiller, Vice President and Assistant General Counsel, IP [Red Hat]. "But that was not enough for us, we wanted broad provisions that covered our customers, who place trust in us, and the open source community, whose considerable efforts benefit our business."

Now we have the proof [PDF].

This is a … Read more

Red Hat's channel is a "multi-billion dollar opportunity"

With as much as 60 percent of Red Hat's $680 million in FY 2008 revenue coming through its partner channel, The VAR Guy reaches a cogent conclusion: "Red Hat-driven solutions are likely a multi-billion channel opportunity now."

Granted, Red Hat's top competition like Microsoft pushes even more through its channel, but let's not forget that Microsoft is a proven entity. Red Hat, on the other hand, is training a new generation of VARs and system integrators to work with Linux and open-source solutions. It has to be both evangelist and business at the same time.… Read more

Red Hat had a good quarter, in case you didn't notice

The VAR Guy points to an interesting post by Red Hat's vice president of Investor Relations, Tom McCallum. The post isn't particularly newsworthy for the data it reveals, all of which was noted during Red Hat's earnings call.

No, it's interesting, as The VAR Guy suggests, because Red Hat felt the need to post it at all.

The VAR Guy wonders... is McCallum trying to tactfully rally investors around Red Hat?...Ahem. Is McCallum saying Red Hat deserves more credit (i.e., a higher share price?) for its most recent quarterly results, based on solid bookings? … Read more

Red Hat revenue jumps 32 percent in Q1

Red Hat continues to impress with strong financial performance, delivering an impressive Q1 2009. Not bad when you consider the company gives away its products for free.

Red Hat pulled in $156.6 million in its Q1 (fiscal year 2009), a 32 percent increase over Q1 2008 and 11 percent growth over Q4 2008. Red Hat's operating income was also up 33 percent over the same quarter in 2008. But it's perhaps the deferred revenue (i.e., subscriptions and other services booked but not yet recognizable as revenue because they have yet to be delivered) that is most impressive: Up 36 percent to $491.8 million.

Clearly, Red Hat is doing something right. Many things right, in fact.

I asked the company specifically about JBoss performance, as rumors have swirled that JBoss has lagged under Red Hat's guidance. Quite the opposite. While there were initial hiccups in bringing the JBoss brand under the Red Hat umbrella, the unit is firing on all cylinders now, contributing a healthy amount to the Red Hat top and bottom lines. Red Hat wouldn't give specific numbers, but I heard the JBoss confidence from a range of different sources within Red Hat.

What about the cost side of the equation? Here there is perhaps even more cause for optimism, but also a creeping concern.… Read more

Opening up enterprise innovation through open-source SOA

CIO.com's Esther Schindler has an excellent take on the role that open-source service-oriented-architectures have in enabling enterprise innovation. Sometimes we think of open source as purely a development phenomenon, but it turns out that the licensing behind the code/development is powerful, as well:

The Swedish railroad SJ had a bright idea: Integrate its ticket sales with online auctions. Any seat that hadn't sold by 48 hours before the train was due to leave the station could be placed on the Nordic version of eBay called Tradera.com. Even if the seat was auctioned for a lower-than-retail … Read more

Europcar buys into Red Hat's allegedly nonexistent desktop

Someone forgot to tell Europcar that Red Hat doesn't plan to offer a traditional Linux desktop. Europcar, with over 2,600 branch locatons worldwide, is saying that not only does Red Hat Enterprise Linux 5 Desktop exist, but it's giving the company's Australian operations quite a bit of value, too:

Red Hat Enterprise Linux 5 Desktop immediately solved our licensing issues and certainly decreased our licensing costs. It also met 100 percent of our users' needs. In fact, the Red Hat desktop solution has enabled us to adopt a new hardware policy that ensures that we maximise … Read more

Oracle increases prices 15 to 20 percent: The joys of pricing power

And you thought Oracle was already pricey...

In a demonstration of what can happen when a company consolidates the industry such that there's far less competitive pressure on it, Oracle has significantly raised its prices. Many of its products saw a 15 to 20 percent price increase.

While the rest of the industry sees price declines through pressure from open source and SaaS, as well as a shift away from license revenue toward maintenance revenue, Oracle is happily raising prices and, presumably, its customers are (un)happily paying. Dave Rosenberg suggests this is a good move since Oracle discounts … Read more

Red Hat opens Network...now how about a community?

Red Hat has been talking about open sourcing its Network for well over a year. Today, it finally did it.

However, code by itself is only moderately interesting. What we need now is a thriving community around "Project Spacewalk," as Red Hat calls the Network project.

Why? Well, because in some ways the commercial open-source community increasingly fragments as it matures financially. What is the first thing that MySQL and JBoss did to add value to their support subscriptions? Build networks. What, presumably, will be the first things that other open-source companies do? Build networks.

What is the result? A swamp of incompatible service-delivery networks.

Now consider the power for Red Hat if its Spacewalk actually served as a gathering point - an integration point - for the commercial open-source community? Powerful.… Read more