Red Hat CEO Likens Company to Facebook, Wikipedia in Collaborative Innovation

SAN FRANCISCO—Red Hat CEO Jim Whitehurst, finishing his second year as head honcho of the world's most commercially successful open-source software company, told eWEEK Aug. 18 that he believes his company is as innovative within the world's IT business culture as Facebook and Wikipedia are in the Internet culture.

"If you think about it, at Red Hat, we're defining a whole new business model," Whitehurst said. "Abstract away from open-source software for a minute: Open source is nothing but a specific instance of the power of participation. It's applying the power of participation as Facebook or Wikipedia do, specific to computer source code."

Other than the commonly used advertising model, Red Hat is the only model that exists that is able to monetize something that's free, Whitehurst said.

Resource Library:

And monetize open source it does. Red Hat in 2008 had revenues totaling $652 million, up $129 million over the previous year—which was up $123 million over the year before that.

"We've enjoyed double-digit revenue growth [24 percent last year], and we're proud of that fact," Whitehurst said. "Open-source development is great and all that, but I think more of the value of Red Hat comes from our open-source business model than from the development model."

Red Hat has continued to do relatively well, Whitehurst said, despite the economic downturn as enterprises look to replace old-line proprietary data center software with the now-established, trusted and battle-proven Linux open-source model. Red Hat's enterprise service and tech support has built a reputation over the last 10 years, and it has become the mainstay of its business.

"When you start thinking about the need for business model innovation more broadly in the 21st century—far beyond computer software—it's fascinating. We're probably defining at least 'a' new business model, and hopefully we can continue to innovate and come up with new business models around it," Whitehurst said.

Free Information 'Becomes More Valuable'

"The whole concept of this is that as information becomes free, it becomes more valuable. We're passionate about this. We feel we're on a mission here. The problem has been this: Other than the advertising model, where you're the hub [of a business], nobody else has figured this out."

Red Hat has made most of its enterprise reputation in the last decade by replacing legacy Unix and Sun Microsystems Solaris deployments.

"We're replacing a lot of Solaris; it's been a big, big business for us for a lot of years," Whitehurst said. "And we have a lot of expertise in it."

Whitehurst, whose company has been tightly partnered with Oracle for several years, chose not to offer comment on Oracle's pending $7.4 billion acquisition of Sun, which is expected to be completed this fall and undoubtedly will impact Red Hat in some ways.