Red Hat is the first pure-play open-source Linux vendor to surpass $1 billion in annual revenue, and it has a solid plan to keep growing its business in the years ahead. That's the key message delivered by Red Hat CEO Jim Whitehurst during the company's annual Analyst Day event held on April 16.
Whitehurst said that in the beginning, his company was all about making sure that open-source technology was a viable alternative to traditional proprietary software. He noted that in the early days of Red Hat, most customers held the opinion that open-source software was almost as good as traditional software, while being dramatically cheaper.
"We have always preached that it [open source] is better in a lot of ways," Whitehurst said. "Our most technically sophisticated customers have always known that."
For example, many of the world's leading stock exchanges, including the New York Stock Exchange (NYSE), use Red Hat Enterprise Linux, and they do so for performance reasons, not because of cost, Whitehurst said. He added that today, most technology innovation begins in open source.
Whitehurst admitted, however, that open-source innovation at times can appear to be somewhat chaotic and fast moving. There is a difference between the innovation model for open-source development and the consumption model for enterprise technology deployment, he stressed.
For example, the open-source OpenStack cloud platform has many contributors and is moving quickly, which can lead customers to think that the technology is not stable, he said.
"That's the real opportunity for Red Hat because we have a record around taking something that is chaotic and making it very stable," Whitehurst said. "The single most chaotic open-source project out there is still Linux."
There are hundreds of different Linux distributions and thousands of people contributing to Linux development, he said, yet people use Red Hat Enterprise Linux as a consumption model to run stock exchanges and nuclear submarines.
From a competitive perspective, Whitehurst took the time to differentiate how Red Hat consumes and supports open source in contrast with other vendors. In particular for OpenStack, Whitehurst said, there is a class of vendor that simply compiles and ships the software.
"They will have a version that they can compile and ship, but they don't have a defined life, the backport schedule and all the things that we do," Whitehurst said.
The value of the technology is not just the functionality that is provided, since the features are all in open source, he said. Rather, the value is in how Red Hat has constructed its business model.
While Red Hat does win some of its business from competitive migrations, Whitehurst stressed that's not the primary area for his company's future growth.
"How we take share is we win an inordinate share of new applications," he said.
Whitehurst said he rarely walks into a potential customer environment where he is told that the enterprise wants to migrate an existing application from a different platform.
"While [Microsoft] Windows is still a large player in the enterprise, more and more new workloads are going to Linux," Whitehurst said.
Given the opportunities that Whitehurst sees for Red Hat, he doesn't see technology as being the biggest challenge he faces. Rather his challenge at Red Hat is an organizational one to scale the go-to-market activities and capabilities of the company.
"When I look at our impediments, it's not technology and it's not competitors; it's building out our own capabilities to be able to drive and achieve the full potential of the businesses we're in," Whitehurst said.
Sean Michael Kerner is a senior editor at eWEEK and InternetNews.com. Follow him on Twitter @TechJournalist.