Red Hat OpenStack will generate zero revenues, billings and bookings this year. Does that make the open source cloud platform a failure? Absolutely not. Here's why Red Hat (RHT) partners need to pay attention.

The VAR Guy

June 21, 2013

2 Min Read
Red Hat39s CEO concedes that OpenStack will not drive any real revenue for the company for at least a year
Red Hat's CEO concedes that OpenStack will not drive any real revenue for the company for at least a year...

Red Hat OpenStack was mentioned 32 times during the Linux company’s Q1 2014 earnings call earlier this week. The open source cloud platform is receiving tons of hype. But here’s the reality check: Red Hat (RHT) concedes OpenStack will NOT drive any material revenues, billings or bookings for the next 12 months. Does that mean Red Hat partners and customers can ignore OpenStack for now? Not necessarily. Here’s why.

When asked about Red Hat OpenStack during the earnings call this week, CEO Jim Whitehurst offered these revealing sound bites:

  • “Regarding OpenStack, we’re very excited about the momentum we have around OpenStack, the interest, the early customers who we’re working with on it. But I also want to temper expectations.”

  • “My guess is we will do a lot of POCs [proof of concepts] in the next year on OpenStack, but people don’t start writing even 6-figure checks for software. They may for some services, but for software, until they get a little closer to production, that’s probably still a year or 18 months away.”

  • “So I wouldn’t expect to see a material impact to the top line for a year directly. Now indirectly, it does help. It makes us more strategic with our customers. It gets us in many more conversations, and that helps drive middleware conversations. It helps our relative share versus Windows, when — as more new workloads are likely to go on Linux.”

  • “So it does have an impact for us, but I wouldn’t expect to see material OpenStack revenues or even billings or bookings in the next 12 months.”

Now, let’s put those comments in context. Dozens of big-name companies — Rackspace, IBM, HP, etc. — back OpenStack. But just like Linux, numerous OpenStack distributions may emerge. And just like the early years of Linux, there are very few OpenStack trained experts, resellers, consultants and deployment specialists. 

That will gradually change. Well-funded companies like Mirantis are building OpenStack cloud partner programs. Customers like Fidelity Investments are embracing OpenStack. And The VAR Guy believes Red Hat’s experience selling to CIOs and corporate data centers could make Red Hat OpenStack a de facto private cloud standard down the road.

If you’re a Red Hat channel partner, start attending the company’s educational webcasts and conferences on the topic. But just like CEO Whitehurst conceded: Don’t expect to win big OpenStack deals near-term. Instead, establish thought leadership for the long haul.

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