Why is Linux vendor Red Hat successful during the current recession?
It was a question put to company executives during Red Hat’s (NYSE: RHT) Analyst Day event Webcast live from New York today.
The executives explained that open source leadership is key to Red Hat’s success, but that the firm is also branching out into other areas so that its success won’t hinge solely on technology.
Moving forward, Red Hat is planning to develop a combination of OEM and channel partner relationships.
Red Hat’s Analyst Day event comes on the heels of another successful quarter that saw the company grow both revenues and net income.
According to Red Hat Executive Vice President Paul Cormier, Red Hat now represents 75 percent of the paid Linux market, easily beating out other players in the sector such as Novell’s SUSE Linux and Canonical’s Ubuntu.
In the middleware market, Cormier said that Red Hat’s JBoss division now commands one third of the market with its commercially supported JBoss server. According to Cormier, the other two thirds of the middleware market are made up of non-paying JBoss users and IBM WebSphere users.
Red Hat’s leadership role also extends to its direct participation in the Linux kernel development process. A recent report from the Linux Foundation named Red Hat the leading corporate contributor to Linux, though overall contributions have come from more than 500 organizations.
In light of the high volume of contributions to the Linux kernel, Red Hat CTO Brian Stevens said it’s important to view Red Hat’s position as one of leadership, rather than power. In Stevens’ view, the power is the larger Linux ecosystem with its hundreds of contributing corporations, which helps explain why Linux is an attractive technology for enterprises.
“It’s not just about making a bet on Red Hat,” Stevens said. “It’s about making a bet on all of us.”
Route to Market
Moving forward, Red Hat CEO Jim Whitehurst explained that a key to future success will be to ensure that Red Hat’s products are available where IT decisions get made.
Currently, Red Hat sells its Linux subscriptions through OEM partners like IBM, HP and Dell. They also have a growing channel strategy.
Whitehurst noted that Red Hat needs to further developer its commercial ecosystem with system integrators. Many technology decisions are not made by enterprises directly, but rather by their technology partners, Whitehurst explained.
Sensing an opportunity, Whitehurst said that Red Hat has built up its sales business development centers over the past year to encourage more interaction with partners like Accenture as well as independent software vendors.
Red Hat plans to stick with its core platforms as it grows its business in the coming year. Whitehurst said that the core Linux operating system, virtualization and middleware will remain the company’s focus, rather than building out new areas such as a database business. The open source database market is currently in a state of transition with the Sun-owned MySQL database in limbo pending Oracle’s acquisition of Sun.
