Concerns about Growth

By eweek  |  Posted 2006-04-13 Print this article Print

Are you at all concerned that you may have paid too much for JBoss? First and foremost, you need to look at the growth of the JBoss business, which continues to grow at 100 percent, and our earn-out considerations continues to focus on that 100 percent year-on-year growth. You also really never know the value of what you paid for an acquisition until three or four years down the road.
My response to The Street has been that well see in 2009/2010, as its not just the technical integration of the technology, its also the sales and marketing—all of the things we believe we can drive with synergies, but now the proof is in the execution. Well see in three or four years if it turns out to be a fair price or if it was expensive. But we feel really fortunate to have got some of the worlds most creative Java thinkers and developers as part of our growing open-source development community. Some analysts have predicted conflict down the line between Marc Fleury and yourself. How do you plan to deal with this? When I was recruited to join Red Hat back in 1997, one of the board members told me that I always seem to get along with weird people. Creative and brilliant minds dont think and act traditionally, and I seem to have the DNA that respects that and can work well with it. We have made other acquisitions, and the founders of those companies are still at Red Hat. When I sat down with Marc, we had three core agreements that gave us both the confidence that we will be able to work well together. The first is a tremendous respect for building an engineering culture around trust and autonomy for the individual developer, and we think identically about that. Second of all, we have a love of, and commitment to, open source and the collaborative development process. Thirdly, Marc and I both think from the same page that this is a for-profit business. So the core things align themselves very well around the relationship between Marc and me going forward. It is no secret that many analysts and customers are talking about the possible negative impact this deal is going to have on your existing relationships with IBM, Oracle, and BEA. How do you respond to that and how are you positioning yourself in the eventuality those predictions prove true? One of the most important things Red Hat and open source has done for the marketplace is move the relationship of the customer from a secondary to a primary role because of the transparency. With that in mind, I think more of our sales are being driven by the customer point of view and demand as opposed to the push coming from the large vendor. The route to market now has changed because of broadband communications where developers can download JBoss, experience the technology and form an opinion. It is not like the historical enterprise selling model of 10 years ago. Read more here about whether Red Hat will lose powerful friends with the JBoss buy. I also dont think we pursued this relationship with JBoss to go out and compete with the existing interests in the middleware space. We see this as a cornerstone of our overall long-term strategy to bring solutions to the open-source developer, build a common infrastructure model around security and maintainability and management through the enterprise based on open source. Those competencies we believe will be value-adds to our existing relationships with IBM, but it is way premature as we cannot engage IBM or any other partners on this until the deal has closed. Next Page: Reaction to the deal.


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