Red Hat: Economic crisis to boost open source

CEO Jim Whitehurst says companies consolidating their tech infrastructure and reducing spending will consider open-source software. But will it help enterprise-level providers?

Alex Serpo Special to CNET News
2 min read

The global economic crisis would provide a boost for open-source software, Red Hat Chief Executive Jim Whitehurst claimed during a visit to Sydney this week.

Jim Whithurst Red Hat

Whitehurst, who stopped over down under as part of a tour of the Asia-Pacific region, said in an interview with ZDNet Australia that the crisis would cause companies to consolidate their technology infrastructure and reduce spending.

"So the bad news is, when things get tight, people stop investing as much in the future," he said. "I would expect to see a slowdown in spending for new functionality." However, the CEO said this would cause more companies to consider open-source software as an option.

"What I do know is that open source will be in much better shape, coming out of the financial crisis than going into it, relative to our propriety competitors," he said.

Whitehurst said this is because open-source software provides a better economic model for creating software.

However, Kevin McIsaac, a Sydney-based analyst for Intelligent Business Research Services, said he does not expect the trend to increase the market share of companies such as Red Hat.

"Do I think the financial climate will drive people toward Red Hat? Not in any great way," he said. "Do I think a deteriorating economic environment is good for open source? Probably, (there will be) no great impact."

He explained that enterprise-level open-source software presents significant costs.

"A lot of my customers whom I have spoken to have said that the support costs are really quite high," McIsaac said. "A few people have commented on how much cheaper Oracle support for Red Hat Linux was than Red Hat itself."

McIssac suggested alternative ways of cutting costs: "One of the ways to cut your costs is simply to go and audit your licenses and get rid of the ones you don't need."

He also warned IT managers to expect budget cuts. "The CFO will be coming into the CIO's office and saying, 'We need to find a way to cut costs'; smart CIOs will already have a plan in their top drawer."

Alex Serpo of ZDNet Australia reported from Sydney.

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