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 Channel Futures

Open Source


Red Hat: The First (and Last) $1 Billion Open Source Company?

  • Written by The VAR Guy 1
  • September 22, 2011
Red Hat CEO Jim Whitehurst says the Linux supplier is on pace to become the first $1 billion open source company. Whitehurst's statement is hardly surprising considering Red Hat's most recent quarterly results. But the $1 billion revenue mark is both good news and bad news for the open source movement. Here's why.

Red Hat CEO Jim Whitehurst says the Linux supplier is on pace to become the first $1 billion open source company. Whitehurst’s statement is hardly surprising considering Red Hat’s most recent quarterly results. But the $1 billion revenue mark is both good news and bad news for the open source movement. Here’s why.

Red Hat’s revenues were $281 million in its latest quarter, according to the official earnings statement. In a prepared statement, Whitehurst indicated that Red Hat continues to push beyond Linux, winning additional business for its virtualization and cloud computing strategies. Whitehurst in a prepared statement said:

“Based on the strong first half results, we believe Red Hat remains well positioned to finish fiscal 2012 as the first billion dollar open source software vendor.”

Impressive. But consider this: Red Hat will likely be the last $1 billion open source company as well. Are there any other $100 million open source companies? Or how about $50 million open source companies? Frankly, The VAR Guy isn’t sure — though our resident blogger suggests privately held companies like Digium, Canonical and SugarCRM could be showing impressive revenue growth.

Unlike most rivals, Red Hat has successfully diversified beyond its initial open source product (Red Hat Enterprise Linux) to generate additional revenue streams — in Red Hat’s case, Jboss middleware, with virtualization and cloud platforms the next big opportunities. To maintain that growth, Red Hat will host a North America Partner Conference, itself signatory of major channel program growth.

The partner conference will include Red Hat Cloud Symposium, designed to teach VARs, systems integrators, and other channel pros how to grow their cloud businesses, and by extension, boost Red Hat’s cloud momentum. And one last milestone for Red Hat in the second quarter: the Open Virtualization Alliance (OVA), of which Red Hat was a founding member, has grown past 200 VMware rivals signed up.

Additional insights from Matt Weinberger.

Tags: Agents Cloud Service Providers MSPs VARs/SIs Cloud Open Source

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5 comments

  1. Avatar Bill Bickel September 23, 2011 @ 4:34 pm
    Reply

    Wow. With the swirl of HP, Oracle, and HP/Oracle battling, it is good to see at least one name brand company out there just continuing to offer solutions that appeal to end users and developers. Low cost/high value stuff seems to always do well. Red Hat has such a simple clean message for operating systems, middleware, and now growing virtualization abilities, and no corporate drama, no wonder people are buying their stuff more.

    The channel and end users have to be a bit baffled with Oracle messaging around “Engineered Systems/Appliances” and saying x86 is kinda bad, but x86 is good if it is buried inside systems with all of our other lock-in stuff, and cost $50,000+. And saying Linux is good, but Red Hat is bad, and SPARC is coming back, and Solaris on SPARC is good, and Solaris on x86 is good… And Fusion Middleware is good, and we want to kill HP, then go after IBM. I think a little more focus on value to end users would be in order for the Redwood Shores gang, but have come to the conclusion that it is not how they play the game.

  2. Avatar The VAR Guy September 23, 2011 @ 5:07 pm
    Reply

    Bill: The VAR Guy knows you have some strong opinions about open source, Red Hat, Oracle, etc. And guess what: The opinions are welcome here because you take the time to present them professionally rather than launching flame wars on our sites.

    Thanks for your 2 cents and readership. The VAR Guy still sees value in SPARC and “engineered systems.” But your point about potential vendor lock-in is an important one. Before buying or partnering on any system — from any vendor — the vendor lock-in question has to be asked.
    -TVG

  3. Avatar Lawrence D’Oliveiro September 25, 2011 @ 11:11 am
    Reply

    I remember a Red Hat exec saying that for every $1 of revenue they got, they took $10 away from their competitors. In other words, they’re having a massively deflationary impact on the whole corporate software market.

    Besides which, most of the world’s GDP comes from small businesses, not large ones. The US is unusual in this regard, since most of its GDP comes from the Fortune 500, but the rest of the world is not like that at all. So this fixation on large, multibillion-dollar companies simply distracts you from noticing the real impact of Free Software on the world economy.

  4. Avatar Open Source Clouds: Linux Distributions Choose Sides | Insta October 26, 2011 @ 8:47 pm
    Reply

    […] Yes, Red Hat’s business has momentum. In its Q2 ended August 31, Red Hat’s revenues rose 28 percent to $281.3 million. Now , Red Hat is on track to become the world’s first $1 billion open source company. […]

  5. Avatar Open Source Clouds: Linux Distributions Choose Sides | Matia October 27, 2011 @ 1:32 am
    Reply

    […] revenues rose 28 percent to $281.3 million. Now , Red Hat is on track to become the world’s first $1 billion open source company.Still, Red Hat and its channel partners face intense cloud competition. Many software companies and […]

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