"Linux is going to be the operating system of the next generation of computing"

About four years after his appointment as president and CEO of Red Hat, Jim Whitehurst reviews for COMPUTING the keys to the success of the business model of the Red Hat company, analyzes the challenges that cloud computing implies and faces organizations users to a decision that they consider unavoidable in the face of the paradigm shift: the Microsoft way or the Red Hat way.

How has Red Hat changed over the nearly four years you've served as the company's president and CEO?

In this period of time Red Hat has more than doubled, almost tripled, its revenue. I think the most substantial change that has occurred is that Red Hat has gone from providing its technology and serving technically sophisticated clients such as stock exchanges, investment banks or telecommunications companies, to having a customer base of all types (airlines, manufacturers, retailers) and to which new users are added every quarter, so that today 80% of our clients are on the Fortune 2000 list.

In parallel to this evolution, we have expanded the range of solutions and now we also cover more general needs. 90% of customers have Linux as their operating system, there is a lot of interest in our offer of virtualization of the operating system and on that basis we have a wide offer in the field of middleware; So we are present both in traditional ERP systems environments and in the cloud platform environment, where Red Hat has become a preferred option at the infrastructure level.

In that time, the Linux market has also evolved. What is Red Hat's current market share in the different open source software categories?

We represent about 80 percent of the Linux market and the enterprise market is closely linked. I must insist that Linux is no longer used by technically very sophisticated people, it has been simplified and Linux is now trusted by most of the world. Around four years ago, conversations about the possibility of bringing critical systems to Linux began to begin and today this is not only a reality but it is also much easier to find technical knowledge and skills to define the necessary hardware structures. Therefore, a process of maturity has taken place.

What advance lines are drawn on the horizon?

From a broader perspective, today we are facing a paradigm shift similar to that of the shift from the mainframe to client / server architectures. With the arrival of cloud computing, what is happening is that workloads are again recentralizing in the data center, where there are massive infrastructures and while access functions are transferred to mobile devices such as the iPhone or iPad, the core functions have place in the CPD. And the important thing in this new world is that these CPDs work with Linux. Certainly Microsoft has Azure, but the clouds - Google, Amazon, etc. - are built on Linux. If you look at the software layer, Windows was the dominant player of the client-server era, and Linux is undoubtedly going to be the operating system for the next generation of computing. This is already a reality in the CPD, but it remains to be determined what will be the dominant operating system in the new mobile devices, however, this is not so important. Certainly the clients run on their mobile devices iOS, Android or other operating systems, but in practice most of the applications are rich applications that are connected with an HTML 5 interface with the CPD. That's why at Red Hat we are very focused on CPD.

What is Red Hat's market share today in different categories of enterprise open source software?

Today, with regard to middleware, 30-40% of Fortune 1000 companies use JBoss. Our payment quota is obviously smaller; so that the payment share in JBoss represents around 10% of the middleware market, but that percentage amounts to more than 30% if we talk about installed base.

In Linux we believe that Red Had has around a 20% share of the total market for server operating systems, that is, in our category we are in the group of the big three. Regarding virtualization, it is difficult to know but we have evidence that large customers use us a lot despite being quite new to this market, so it is difficult to calculate it, but it is certainly growing rapidly.

The economic situation is directly affecting IT investments and vendor performance. Has Red Hat been forced to make changes in this context? Will you achieve your goal of exceeding 1.000 billion dollars in turnover this year?

Last month we reaffirmed and updated our business goal that now exceeds $ 1.100 billion. In fact, we are already exceeding our growth target. In the first half of the year we increased our revenues by 27%, so we continue to enjoy significant growth. Our value proposition is very successful in difficult market contexts. We enjoyed double-digit growth during the worst part of the recession in 2008 and 2009, and in the still difficult circumstances of the current economic environment it is that value that allows us to continue growing. When customers have difficulties they have to be creative to save money, they do not turn to WebLogic but look for alternatives and new possibilities, which is good for us because it expands our potential market.

What is the success of Red Hat's business model?

I have already said that Red Hat represents almost 20% of the server operating system market by number of installations and that represents 3% of the revenues in that market. The data is impressive. I think there are three valuable components to our business model. In the first place, we are able to derive value from open source as a model to develop our software at a much lower cost for our clients. Second, we have a business model that is much more customer-friendly, we market a subscription of software updates and, unlike what happens with traditional providers, if the customer does not see value they can stop paying us and continue using the software. We give customers more alternatives and that requires us to focus a lot on customer service. Whether we are talking about middelware or operating systems we offer great value to customers at a significantly lower cost. The third ingredient has to do with innovation. Traditionally, IT innovation occurred in a few large companies, Oracle, IBM, SAP, etc., but what innovation is happening today occurs in other types of companies: Google, Facebook, Amazon ... These companies have a series of problems and they do not depend on Oracle, they depend on themselves, and together we can reassess requirements and choose the most valuable projects. Our Cloud Forms platform is used by providers such as Facebook or Google. And it is that if historically open source has provided alternatives to professional software, it is currently leading innovation.

Cloud computing is outlined as the way forward in the provision and consumption of software. How does open source fit into the cloud world? What is Red Hat bringing along the way and how is the market responding?

I will talk about a couple aspects. Our vision of cloud computing is different from that of many companies that see it simply as another 'stack', that is, I have a cloud proposal and another on-premise proposal.

Working with clients we have seen that over time companies will have a series of applications and multiple options for their deployment. For this reason, we have been very focused on building the infrastructure, tools and software solutions that will allow us to better deploy and manage those applications. What is different from the competitors is that with our technology it is not only possible to deploy Red Hat applications, but you can also deploy all kinds of applications, be it VMware or WebLogic. In addition, we have a Certified Vendor Program that allows us to work with the vendor and have full guarantees that their solutions work seamlessly with Red Hat and that they will be supported by ISVs. This is a very important piece. On the other hand, we have Red Hat Enterprise Virtualization, which includes tools to operate virtualized infrastructures. And also, we currently have a new solution in beta, Virtual Forms, which will probably hit the market next year and which configures a layer that basically allows managing applications in various environments, that is, deploying applications with both Red Hat and WebSphere or any other infrastructure. In the beta program, we have already obtained a very positive response from customers, mainly because the solution covers both public and private clouds.

Another product that is generating a lot of interest is the PaaS Open Shift platform, which allows applications to be deployed immediately with a cloud-based model and which has several differentiating characteristics: it is 'agnostic' with respect to providers, the developer can choose where they want it to be. The application is deployed and is the only platform that offers full Java EE capabilities, which is very important to customers.

The company recently acquired Gluster. Is it about gaining ground in the storage market?

The Gluster purchase has two assemblage points. First of all, when building our cloud management capabilities, since for applications to move, data must also be mobile. The problem in the cloud is mainly in scaling the data and most of the solutions give an answer combining software and hardware, but they are not very friendly in cloud environments. What we need are software solutions. Now with Gluster we have a solution that is not only open source but also solves this problem and you can also run it in different or even combined cloud environments. We must also take into account the explosion of unstructured data and the fact that most solutions for unstructured data are very expensive per Mb. Even in companies there is an explosion of this type of data and Gluster allows us to give response to your application scalability and mobility needs.

Is Red Hat contemplating new purchases? In what areas?

We will see more acquisitions in the coming years. A few years ago we bought Qmranet to gain reach and weight in the virtualization market. After that acquisition, we took about two more relaxed years to integrate the company. Last year, in December, we bought Makara and this October, Gluster, and we will be increasingly aggressive because we are expanding the portfolio of functionalities that customers really need to manage their applications in the emerging hybrid world.

On the other hand, a large part of the software war is currently being waged in the world of mobile devices. How does Red Hat position itself in this field?

We have thought a lot about whether we should be involved in the mobile device operating system market. Linux is certainly present in this space, but we have not yet found the model that works for Red Hat. People pay us for our software and our support of their mission critical applications. Our model does not work for mobile devices. That said, we are seeing a huge evolution in our middelware to respond to the mobile world. These devices basically demand the same capabilities and components that an application server can provide and from that point of view we work a lot in the mobile space.

Finally and closing with innovation, where will the future pass?

As we move into the new cloud computing paradigm and new IT delivery models, change is more fundamental. The Intel and Windows tandem was the winner of the previous great transformation and it remains to be seen who will win this generation. Today there are two great options: VMware, which is moving towards its transformation into the new Microsoft, and Red Hat, which is the real alternative, not necessarily in products, but also in terms of vision. That will be the choice to be made in the next three or five years: do you want a Microsoft type company or a company that bases its progress on the open source business model in a truly open new era?