BOSTON (Reuters)—Red Hats new chief executive said on Friday that the company will continue to pursue a business model under which it makes its software available at no cost and makes money selling services to businesses.
“We are a mission-based company. Democratizing information is a social good,” Chief Executive James Whitehurst said in an interview with Reuters. “We will be open source. We will be the leader in open source.”
Last month he was named CEO of Red Hat, the worlds largest publicly held developer of open source software.
Open source software makers invite the public to help in developing their computer programs, using the Internet to collaborate.
Proponents argue that this collaborative approach results in the creation of programs that are superior to software from companies such as Microsoft Corp, which keep their code secret and generally require customers to pay a license fee for each piece of software in addition to fees for any services.
But Red Hats approach also gives rivals the ability to copy and resell its products.
Oracle Corp, the worlds No. 3 software maker, started distributing a copycat version of Red Hat Linux in 2006 and offering support at prices that it at least initially said were cheaper than those of Red Hat.
A group of software developers have collaborated on a second copycat version of Red Hats product, known as CentOS, that is available for free download over the Internet.
While it is unclear how much business Red Hat has lost to Oracle or CentOS, analysts say the emergence of those products shows that open-source companies are constantly vulnerable to new competitors with low barriers to entry.
In addition, Red Hat faces fierce competition from Microsoft, which is launching a new line of rival products next year.
Also, Red Hats existing customers are free to keep using the software once their service contracts have expired.
“There are frustrations with any model. Its part of the greater good,” Whitehurst said. “Its easier to copy what we do. We are not going to win by providing better bits. We are going to win by providing better service and better value.”
He said that businesses seek out Red Hats products partly because the company has the most expertise in its field.
“Hemingway could talk better about his work than somebody who could just copy it,” he said. “The same is true about software. We are built around core values about being open and being collaborative … We are enabled to provide better value because it is part of our culture.”
Whitehurst resigned as chief operating officer at Delta Air Lines Inc, last year after he lost a succession contest for the post of CEO to another executive.
(Reporting by Jim Finkle, editing by Gerald E. McCormick)