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Maybe Red Hat can be acquisitive, after all

Red Hat has a history of acquiring companies. But can it do so successfully and thereby grow its business?

I wouldn't have believed it, but Matthew Aslett has the numbers to prove it:

Red Hat is a consolidating force in the open-source world, after all.

One trend that emerged very quickly is how much of a driving force... Red Hat has been [a driving force in] acquiring both open source and proprietary vendors.

There have been 72 mergers and acquisitions involving an open source software acquirer or target (or both) according to [The 451 Group's] figures.

Red Hat has been involved with 16 of them, spending the best part of $1.3bn (and that?s just the disclosed amount).

Most of these were several years ago during the dot-com boom when Red Hat was trying to acquire its way to a business model. With its model now churning out generous profits, Red Hat's acquisition binge has slowed, becoming more focused. Suffice it to say, I think we'll see more JBoss-like acquisitions, rather than Hell's Kitchen Systems-type purchases.

Who is next? Red Hat has neglected to ask me my opinion on the subject, so let me offer up a few likely candidates. I don't see applications in Red Hat's near-term shopping cart. It probably makes more sense for it to look for adjacent products/technologies to those it already has, like the following:

  • MySQL. MySQL's valuation will prohibit this in the near-term, but owning the "L" and the "M" in the LAMP stack would make for an interesting story. Just look at Red Hat's competitors: every one of them owns a database. Red Hat could go with PostgreSQL, but it has learned from experience that buying into second place isn't a winning strategy.

  • MuleSource. JBoss competes poorly with MuleSource in the EAI/ESB world. MuleSource successfully sells to a key Red Hat customer demographic, the Fortune 500. MuleSource's open-source ESB technology fits Red Hat's model: complex and gritty, making a supported, certified binary a must.

  • Zend. Another high valuation, but also the pathway to helping to manage the next generation of applications. Plus, what better way to get Mark de Visser to come back? :-)

Those are my top three picks. Two of them are so expensive that I don't see them happening anytime soon. If pushed to add a fourth, I might throw in Hyperic for IT management. But Red Hat isn't yet at the point that it can digest more than one major acquisition each year.


Disclosure: I'm on MuleSource's board of advisors.