What is the world's defining software company for the 21st Century?
Red Hat wants to lead the world, but it doesn't. Google and Apple do. What do these companies have that Red Hat lacks?
Which company did you think of when you read that title? My guess is that you didn't think of Microsoft, Oracle, SAP, or...Red Hat, though Red Hat claims this mission as its own. Why? Red Hat has taken as its mission the mantle of leadership into software's future, but it is not the company we most associate with the future. Who gets that honor?
Apple and/or Google.
I spent some time this morning discussing this with a friend who who runs IT for part of Google's European operations out of its London office. He has a hugely interesting background, having spent a few years at Red Hat before joining Google in 2007. He left Red Hat on great terms and continues to be an admirer of his former employer.
It's not about the money. Most have made plenty of money elsewhere.
Instead, I believe it has everything to do with the customer which, not coincidentally, is almost certainly the reason that Google (and Apple) get credit for defining the 21st-century software experience, rather than Red Hat (or any other enterprise software company).
Let me explain.
Something has changed in how software is developed and consumed, including by large enterprises. As the Internet and personal computers have democratized the computing experience, computers have become a home phenomenon as much as a work phenomenon. Indeed, for those like me with a laptop and home office, it's virtually impossible to distinguish between "home" and "work." There is no spatial distinction - it's just a matter of what I happen to be doing on my laptop at a given moment.
Along the way, "consumer IT" has increasingly displaced "enterprise IT," in large part because it is better designed and hence is much easier to use. Enterprise IT likes bland Dell boxes running Windows, but I prefer beautiful Apple machines running Mac OS X. Enterprise IT may insist I use SAP for invoices, but I prefer PayPal. Enterprise IT insists on Microsoft Office, but I increasingly prefer email and Google Docs because they let me collaborate in a more natural, web-centric way. Enterprise IT insists on using Exchange, but I prefer to POP my .Mac account and use Zimbra because of its sophisticated blending of third-party services with email (i.e., mashups).
And so on.
Enterprise IT is still there, and still cuts big checks to big vendors, but it is losing relevance as "prosumers" use what works rather than what is foisted upon them. No doubt this creates short-term manageability problems for IT, but the long-term gains of making software easier to use will benefit enterprise IT administrators. Tried managing Google Apps lately? At $50 per user, it's almost criminal how little it must be administered. How do these Google guys make any money on that?
And yet they do. They do because they have shifted all the ugly middleware and infrastructure "heavy-lifting" onto their own shoulders, focusing the end user instead on the software experience and charging around the periphery of that experience.
This, I believe, is the big shift that enterprise IT vendors need to learn.
Enterprise software vendors that neglect the user experience - that continue to ignore or overlook the revolution in how people interact with software - will lose. No, they won't evaporate tomorrow (Seen Microsoft's balance sheet recently?), but the future will relentlessly erode their comfortable present.
Where does Red Hat fit into this? Well, it makes exceptional software for enterprises, and has shown more ambition of late, going after the middleware market. This is good, and surely there will be a need for its services for many years to come, just as there will be demand for Oracle, SAP, etc.
But Red Hat is changing the way enterprises think about the software relationship between vendor and customer. It's very possible that Red Hat is defining a transition point but not the end point for enterprises. And unfortunately Red Hat is not doing much to redefine the end user's experience with software because its software (Operating systems and middleware) don't really visually affect the end user. They are brilliant, must-have pieces of the puzzle, but they don't change business users' or consumers' mindsets about software.
Instead, Apple is doing this with the iPod and iPhone (and, to a lesser extent, Mac OS X), while Google is doing this with Search, Apps, Earth, etc. etc.
Is this a bad thing? Does it really matter if Red Hat defines the software experience in the 21st Century?
Yes and no. No, in the sense that it's clear to me that Red Hat can create a multi-billion dollar business doing what it's doing. But yes in the sense that Red Hat (and all of us who sell software like Red Hat, whether open source or proprietary) will always cede the most poignant customer relationship to the Googles of the world who sit in front of normal people, day in and day out. Red Hat may power the Googles of the world, but Google powers the imagination and productivity of people.
Perhaps it's a false dilemma. Perhaps there must always be suppliers to consumer-facing companies, suppliers with no aspirations to serve that role and no demand that they do such. And perhaps it really doesn't matter.
But sitting there today with my friend, eating some of the best fruit I've had in years (Google really takes care of its employees), I couldn't help but notice the mountains of cash that await those that deliver and control the consumer experience. Microsoft has the dominant position it has today because of the cozy relationship it has with business users and consumers who trust its interface to the web and desktop. Google will own that experience in the 21st Century.
As such, Google may have more say over Red Hat's, SAP's, Oracle's, etc. futures than they do.
Am I missing something?