Red Hats Value Proposition for Cloud Computing

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.

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.

Company Has Earned Respect Over 10 Years

Raleigh, N.C.-based Red Hat has been producing its front-line operating system, Red Hat Enterprise Linux, since the late 1990s. RHEL and the JBoss server middleware products-acquired in April 2006 for about $350 million-are respected around the world for their quality of engineering and the accompanying service Red Hat provides.

Whitehurst, who came to Red Hat in January 2008 after serving as Delta Air Lines' chief operating officer and guiding it through-and out-of bankruptcy, is getting his company and its developer community prepared for its annual Red Hat Summit, set for Sept. 1-4, 2009, in Chicago. It's by far the largest gathering of Red Hat-affiliated developers held each year.

The company will be making a major announcement about RHEL at the summit. Meanwhile, the RHEL 5.4 beta has been out for several weeks and is being tested by current Red Hat customers and independent open source developers.

"We produce a new full version about every two to three years, and then we add in 'dot' versions a few times per year," Whitehurst said.

This will be an important update. Details will be forthcoming, but it is known that the 5.4 beta described on DistroWatch includes new virtualization capabilities that will enable the operating system to become, in effect, its own hypervisor within a data center structure.

"We're strategically making a move from Xen to KVM [Linux's kernel-based virtual machine], and there are three big sources of value affiliated with KVM," Whitehurst said.

"First, there's the advantage of rapid hardware enablement; all the big hardware manufacturers-IBM, HP, AMD, Intel-do their own hardware enablement. We don't have to do it. When it [RHEL 5.4] ships in the fall, it will have a larger base of certified hardware on Day 1 than [VMware] ESX does today.

"Second, you get the overall benefits of a full operating system-so you can run some apps on bare metal and some virtualized on the same box. Third, by running a guest on Linux, you inherit literally thousands of man-years of code that have been written to do various things."

Whitehurst said there are numerous open source code sets that can be used; he offered two examples here.

"One is SELinux, with all that development by the military, Red Hat, tons of people around the world, the full security regime around that," Whitehurst said. "Guess what? All those policies can wrap around any running process in Linux. And guess what else? You can [also] wrap those virtual instances. All that security work that's been done-we don't have to rewrite it. We just use SELinux."

The other example, Whitehurst said, is the Condor Project at the University of Wisconsin, which is a long-running project involving scheduling across a grid.

"We're commercializing this as something called MRG-Messaging/Realtime/Grid," Whitehurst said. "All of that work that's been done on scheduling workloads-they're inherited. You now can take all these running guests as processes and say: 'You want to know how to optimize them, and spread them across a thousand servers?'

"Well, we're not going in and rewriting all of this; it already exists. Just use it."

Red Hats Value Proposition for Cloud Computing

As for the value proposition that RHEL brings to building cloud computing infrastructures, Whitehurst said he was surprised in some ways about the momentum his company is getting in this hot area.

"I say that because we didn't form a 'cloud' unit, or sit down and say, 'What software do we need to develop for the cloud?'" Whitehurst said. "It turns out that if you build very layered, modular, standardized architecture, and you sell it in a very flexible, nonlicensed way so people can deploy it the way they want, when they want, without having to worry about the number of cores or what country they're in, etc.-all of a sudden, you've built an architecture that kind of looks like a cloud."

Red Hat's layered architecture-from the operating system to the virtualization layer to the application server and SOA (service-oriented architecture) above that-works well with clouds, Whitehurst said.

"No. 2, the layering works particularly well with many people's business models," Whitehurst said. "Take our virtualization layer, for example. We feel really good about it, first of all. Anybody can manage it with our set of APIs. You can manage it with Tivoli, OpenView-if you want to use anybody, you can."

Application mobility is another key selling point for using RHEL in the cloud, Whitehurst said.

"An application certified on RHEL, that certification works whether it's bare metal, in a virtual instance or on a cloud that's running our virtual infrastructure. So, when people say, 'I want to run this app in my cloud,' well, how do you know if it will run, and run well-and if you can get tech support? If it's running our virt in RHEL, it's certified to run," he said.

At this point, Red Hat is not ready to give customers "cloud in a box," Whitehurst said. "We're doing specific layers that open source is really good at. If you want to get 'cloud in a box' from IBM or HP or whomever, then have at it!"

As for increasing competition in the enterprise open-source software space, Whitehurst had this to say about Ubuntu, the 5-year-old upstart Debian Linux-derived distribution that has been making inroads into the data center in some sectors.

"Look, I'd never want to underestimate a competitor, but that said, the capabilities required to come out with a good distribution are vastly different from building a business model around an enterprise edition," Whitehurst said.

"The code is free; we built a business model around the massive certifications, the support, the performance of professional services, etc. Frankly, we're uniquely positioned there. There are no other materially sized, profitable open-source software companies.

"It's because we've figured out that the software is free and how to build value beyond that."

Ubuntu has done a "wonderful job of getting out and promoting desktop Linux," Whitehurst said. "The more desktop Linux we get out there, the better. But as soon as you start saying 'server,' the code is just the beginning. I think they're [Ubuntu] a ways away."

For more information on the Red Hat Summit, go here.

Editor's note: This story was updated to clarify information about the RHEL 5.4 beta version, which is now being tested.