Q&amp;A: Red Hat&#39;s CEO on his company&#39;s latest acquisition
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OCTOBER 01, 2004  - After his company announced that it&#39;s acquiring security and authentication tools from Netscape Security Solutions to bolster its software arsenal (see story), Red Hat Inc.
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Having established itself as the leading enterprise Linux vendor,&#160;Red Hat is in a pivotal phase of reinventing itself as a broader open-source software provider and a long-term technology leader a la Microsoft and Oracle. It&#39;s a tall order, and among other things it will take a business plan that lets the company move smoothly through this make-or-break stage.Coming up with that internal plan lies on the shoulders of 30-year IT veteran Nick Van Wyk. Van Wyk joined Red Hat last year from EMC, taking a newly created role as vice president of operations to optimize Red Hat&#39;s subscription model and create better business processes to support the company&#39;s channel.Two weeks ago, Red Hat also appointed him to a new role as senior director, transformation, in charge of examining the company&#39;s internal processes and operations to &quot;reposition all of our systems to support the next stage of our evolution,&quot; he said.That stage includes capitalizing on its April 2006 purchase of JBoss and the open-source middleware package that comes along with it, as well as growing from a company with annual revenue of about $500 million to a billion-dollar company. Red Hat, whose affections toward other vendors can be fickle, also is challenged to build out a stronger ecosystem of partners to support not only Red Hat Enterprise Linux OS but also JBoss and any new technologies it brings to the table.In the current technology business climate, Red Hat is a bit of an anomaly. The company has managed to exist for nearly 10 years with one core competency: a Linux server distribution it supports and provides maintenance for. The company has branched out into other areas of software, such as desktop Linux and virtualization, but for the most part, the server OS has been its bread and butter.Recognizing it can&#39;t subsist long on this diet in an environment of consolidation and diversification, Red Hat made a calculated risk and purchased JBoss. It&#39;s now trying to position itself to make the most out of that and possible other new product developments or purchases, Van Wyk said.&quot;As we move forward, we will more be described as an open source services and solutions company,&quot; he said. &quot;That&#39;s an enhanced position for Red Hat.&quot;In its present situation, Red Hat has &quot;a base, a critical mass of applications from which to grow,&quot; said George Weiss, vice president and distinguished analyst at Gartner. But investors are more interested in what comes next than in how well Red Hat is currently executing, he said.&quot;It&#39;s not a look at the present basis, it&#39;s what you can do to instill market confidence that you have a sufficiently scalable business model, and the operating system alone is not going to be it,&quot; Weiss said.Van Wyk knows full well the pressure on the company, and said that during Red Hat&#39;s two-to-three-year transformation, the company will be making changes to ensure it can meet both the internal and the external needs of scaling an IT company.The company is currently examining how it handles a host of functions, among them lead management, partner relationship management, subscriptions, financial systems and technical support. The next step in the transition will be to make changes where necessary to ensure the business is operating efficiently and providing the highest levels of customer service, he said.&quot;This whole idea of ease -- the ease of doing business with Red Hat, the ease of support, the automation of those technologies, the time to acquire OS technologies, zero time to subscribe -- those are all built into [our goals],&quot; Van Wyk said. &quot;These are things that have been said to us that customers want to have.&quot;Van Wyk declined to go into detail about exactly how Red Hat will execute on this strategy, saying the company won&#39;t really have a clear idea of the changes it will make until the initial assessment is complete.One thing Red Hat should consider is more acquisitions, said Raven Zachary, open source research director for The 451 Group. But Red Hat should move fast to acquire companies that will help them get into new markets -- such as database and data management -- because larger IT vendors are eyeing similar purchases.&quot;They have companies like Oracle, Microsoft, IBM and SAP competing for the same targets,&quot; he said. &quot;Red Hat doesn&#39;t have the capital to compete with those suitors. They need to move very quickly before we get into an era where the largest IT vendors are competing for these targets.&quot;
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Red Hat hopes its latest release will lock in its position as the Linux leader as more companies vie for a piece of the competitive market.
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When Matthew Szulik left Red Hat abruptly for family health reasons in December, many people were scratching their heads over the company&#39;s new choice of CEO: a young executive from Delta Airlines, Jim Whitehurst. But Whitehurst&#39;s chief operating officer title at Delta and position outside of the technology industry are misleading; a peek into his past reveals a computer science degree and a passion for open source technology, not to mention a smooth operator who helped bring a struggling airline out of bankruptcy.Still, Whitehurst, 40, has big shoes to fill in replacing Szulik, the man who took a small, unknown company and turned it into a savvy business competitor that made Linux a household name and struck fear in the hearts of much bigger rivals&#160;such as&#160;Microsoft. Today, Red Hat is the leading Linux vendor and is financially sound, but the company is in a pivotal phase of reinventing itself as a broader open source software provider and a multibillion-dollar technology leader that can compete long-term with much larger companies.Whitehurst spoke with IDG News Service this week about the key findings of his first month on the job and where he thinks Red Hat should focus its attention to evolve at a sustainable pace. This is an edited version of that interview.IDGNS: I was surprised to find out that you have a computer science background when I heard you came to Red Hat as COO from Delta Airlines. I didn&#8217;t expect you to be such a techie.Whitehurst: I do have geek cred. For some reason, your reputation is always based on your prior experience. When I was at the airline, people said, &quot;Who is this strategy consultant running an airline?&quot; Now I&#39;m an airline guy running a technology company. I wish I was called an airline guy when I was at the airline!IDGNS: Was this a personal interest in open source that led you to Red Hat? Was Delta a big user of Linux?Whitehurst: Delta certainly uses some REL (Red Hat Enterprise Linux) and JBoss, but it&#39;s more of a personal interest. I was hacking around with Slackware, one of the early Linuxes that was out there in the &#39;90s, and an early adopter and user of Fedora all the way through when I got the call for joining Red Hat. It&#39;s always been a passion of mine, so the opportunity to get out there to lead is an extraordinary privilege and honor for me.IDGNS: Red Hat is currently in a great position as leader of the Linux market and has been doing well financially, but the company has been called upon by Wall Street to grow and possibly diversify the business. When you look at the company, what are its biggest challenges right now?Whitehurst: Let me start off by saying I&#39;ve only been here a few weeks. The first month [has basically been] going out on the road with customers, employees, with investors, with analysts, with our partners-slash-competitors and really trying to get a sense of the business, what&#8217;s working well and what&#8217;s not. The good news is, most things are working well -- from the standpoint of being a very healthy business growing rapidly with healthy financials.I think you&#8217;re right there are certainly areas where we can do a better job. First off, I would just say the general organizational focus. We actually do a lot of different things, support a lot of different projects. We have to be careful that we&#8217;re focusing on the right things and putting our investment dollars where they&#8217;ll have the most impact. I&#39;m still going through the details of what we do and what we don&#39;t do, so stay tuned on that.A second area where there&#8217;s still a lot of opportunity for Red Hat would be basically [in] processes and systems, including IT systems and governance, especially for a company that&#39;s grown so rapidly. A lot of those processes and systems and ways of doing business are different for a company like Red Hat that&#39;s [US]$500 million on its way to a multibillion-dollar company than they are for a small company. Some time and attention on basic execution to make sure we have the processes and systems in place to grow, and grow healthily, are another area where I plan to spend a fair amount of time.IDGNS: And what about your experience makes you well-suited to help meet those challenges and diversify Red Hat&#39;s products beyond Linux into more of a full open source software provider?Whitehurst: For starters, I am an operator. I am pretty good at getting a company to focus, and focus on a few things. We certainly did that at Delta and did that well in the turnaround. Obviously, having come from a larger company and having run a larger company, I have a good sense of the processes and systems we need to make sure governance [and] processes work well.About whether we need to diversify or not: People are asking, &quot;Well, should we have bought [open source database company] MySQL?&quot; [Editor&#39;s note: Sun Microsystems said last month it is&#160;buying MySQL for about $1 billion.] We are still a very small-share player in the server OS market and a small-share player in middleware [with JBoss]. If you look at the quality of our technology, it&#39;s the best. We feel very good about that. We still have basic execution to do to reach our full potential in the markets we&#39;re in. So I don&#39;t feel the need to diversify until we nail the product and are fully [satisfied] with our existing products. I&#39;m not sure we want to divert our time and attention to other things.IDGNS: A lot of people have been critical of Red Hat for what it&#8217;s done so far with JBoss, and think success with this is key to proving Red Hat can evolve beyond Linux. How are you going to make that business more successful?Whitehurst: Obviously execution and commercial execution will be big focuses going forward [for JBoss]. We fundamentally changed the JBoss business model from a big consulting/support [business] to our enterprise/.org models that we had with REL [on the enterprise side] and Fedora [on the .org side]. It has, without a doubt, proven to be a very successful model, and one could argue it&#39;s about the only demonstrated successful model of any size with open source. In the same way we have Fedora and REL, we have the .org version of JBoss and the enterprise edition. JBoss had a different business model before, but we think our business model has proven the most successful and the most durable. It&#39;s the right decision. It just takes a while.The good news of that also shows that it&#8217;s not easy to develop a good business model around open source, so it&#39;s a relatively defensible model going forward. We feel very good about where JBoss is. ... We think we can grow twice as fast as the core REL business.Red Hat&#8217;s never been involved in any material way in the application components of the stack. We do provide a full open source stack with the LAMP stack. We will continue to do that, so we&#39;re playing there to some extent. In terms of our focus and where we&#39;ll invest our team and attention and dollars, the [market for the] infrastructure component of software worldwide is close to $100 billion. We&#39;re a $500 million software company. I would argue we&#39;ve barely scratched the surface. I&#39;d much rather we make sure we make progress there than get into the CRM business. Once we&#39;ve achieved our full potential in our core businesses, we can open the aperture. But I want to make sure the company is focused on the potential of our businesses in that core market.IDGNS: Microsoft is coming out with Windows Server 2008 pretty soon. Do you see this as a good opportunity to snag Windows customers who may be thinking of upgrading and instead moving them over to Linux? Is there still competition in this space, or will it always be the Linux camp sticks with Linux, and the Windows camp sticks with Windows?Whitehurst: We&#8217;re seeing a lot of migrations from Microsoft to Linux, from Unix to Linux or even Unix to Microsoft. There&#39;s a big battleground out there. Anytime there is a significant upgrade or change, there is an opportunity for us. Anytime a customer stands back and says, &quot;Let me reassess this&quot; and &quot;Do we want to upgrade?&quot; that&#39;s great for us because our value proposition is much more compelling for our competitors. Whenever there is a reason for customers to reassess, that gives us an opportunity to show our value, so we&#39;ll be out there aggressively this year.IDGNS: Much was made of Microsoft&#39;s interoperability deal with Novell in November 2006. Has that deal hurt Red Hat in any way? Do you even view Novell as a major competitor anymore?Whitehurst: There may be a deal or two out there, but it hasn&#8217;t come up to my level. We really don&#8217;t see them that much in the market. They&#39;re not really a factor. Given our market share and certified ecosystems of partners -- [those] really drive our position.IDGNS: Are you worried about&#160;Microsoft&#39;s patent claims against Linux, which were recently&#160;dismissed again by Linus Torvalds?Whitehurst: We&#8217;ve spent a lot of time looking at that, and we have an assurance program for our customers, so they don&#39;t need to worry. Microsoft for years now has talked about 235 patents [that they own that Linux violates], but they&#8217;ve yet to tell us any of them and we continue to ask, &quot;Show us what they are.&quot; How many times can you keep saying it before you pass on the opportunity to do anything? At first people got concerned, but after years and years and years, you recognize it&#39;s a lot of bark and no bite. We never want to take any claims of intellectual property violations lightly, but those have been around so long with absolutely nothing behind them. After a while, it becomes harder and harder to take those seriously.IDGNS: Where would you like to see Red Hat be in five years?Whitehurst: Again, this company is currently the open source leader. Open source is still really a nascent part of the IT infrastructure in corporate America. As the leader of open source, one of the things we need to do, and should do, is foster and further open source awareness and adoption in worldwide IT. My view of success includes how well Red Hat does that in the future as a multibillion-dollar company.We want to see the continued adoption of open source as key technology across corporate IT. [We&#39;ll] continue to foster communities of use in the developing world where we operate, and communities of use where we remain sure that information and software remains free and unencumbered by proprietary formats. When we do well, we do good. We certainly have aspirations for size and growth and profitability, but we do recognize we have a role in fostering adoption and the benefits that go along with that. The great news is, this is a company in wonderful shape with a fantastic brand and market position and extraordinary, high-quality people. It&#39;s up to us not to squander that opportunity.
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New Red Hat CEO Jim Whitehurst says the company will focus on its Linux OS and middleware while improving customer service.
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Sun Microsystems Inc.'s combative chief executive, Scott McNealy, fresh from resolving his long-running quarrel with archrival Microsoft Corp. , has found a new target for his wrath: Linux software maker Red Hat Inc.
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Not my bag, baby The news that the operations chief from a major US airline, Jim Whitehurst from Delta, is taking over at Red Hat from Matthew Szulik is a further sign of the growing legitimization of open source and Linux in the eyes of corporate, mainstream America. It underscores how the âsuits to sandalsâ ratio in the open source and Linux movement sliding further towards the suits.â¦
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Linux Journal recently caught up with Mandriva CEO, FranÃ§ois Bancilhon, to find out more about a recently announced partnership between Mandriva of France and Turbolinux of Japan. read more
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(InfoWorld) - The president of virtualization software leader VMwareÂ on Wednesday questioned the strategy of rivals that are integrating virtualization functionality into their operating systems. Diane Greene made the comments at the third and final day of the Morgan Stanley Technology Conference in San Francisco. VMware, a subsidiary of storage vendor EMC, doubled revenue in EMC's latest quarterly report, compared to the year ago quarter, as enterprises embrace VMware's virtualization software to make more efficient use of the servers in their data centers. Rivals such as Red Hat and MicrosoftÂ have responded to VMware's dominance by integrating virtualization into coming new operating systems. Red Hat isÂ introducing Red Hat Enterprise Linux 5Â next week and Microsoft's new Windows server OS is due later this year. But Greene, in discussing virtualization with analysts for the investment firm, said she wonders how effective the competition's virtualization features can be. "Traditionally, the operating system manages the hardware and manages the application. Once you virtualize with a hypervisor, that is now what is managing the hardware, not the OS," Greene said, in a presentation that was distributed via webcast. "Now the operating system is just managing the application. So certainly Windows and Red Hat are moving to integrate virtualization into their OS, but part of the value proposition seems to be lost when you do that." Spokespeople for Red Hat did not respond to a request for comment, but a spokesman for Microsoft said its OS easily supports virtualization. "Resource management has always been part of operating systems. Today, vendors such as Sun, Novell, and Red Hat incorporate virtualization into their operating systems," wrote Patrick O'Rourke, a senior product manager for Windows Server, in a prepared statement. "We are making investments across Microsoft to offer our customers a complete set of virtualization products from the desktop to the datacenter. All assets, both virtual and physical, [are] managed from a single platform." VMware is a strong contributor to the earnings of parent company EMC, which also sells storage hardware and security software. Greene also is executive vice president of EMC. Revenue for VMware increased to $232 million in the fourth quarter of 2006, 101 percent more than a year prior. The growth comes from increased demand for VMware Infrastructure 3, a virtualization software suite for servers and storage networks. VMware's growth prompted EMC to recently announce plans toÂ spin off 10 percent of VMwareÂ in an initial public offering of stock. EMC executives said they anticipate releasing the prospectus later this month for the IPO, expected about midyear. Greene noted the stock sale will benefit VMware employees as well as potential shareholders. "Our stock-based compensation will track our performance and that is the ideal model," she said. Also at the Morgan Stanley conference, Greene acknowledged that virtualizing servers, which helps them use more of their designed capacity, may suppress server sales growth. But she said many customers are upgrading servers as they introduce virtualization into their operations. Those new servers are more high-end products, with greater processing power, and should yield higher margins for server vendors. EMC reported fourth quarter 2006 financial results Jan. 23, posting net income of $389 million, or $0.17 a share, on revenue of $3.21 billion. It edged out analysts estimates of $0.16 a share.
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New CEO brings passion and an eclectic background to help him chart a new course for the Linux vendor.
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Two months after announcing the resignation of its chief financial officer and six weeks after it changed the way it books support subscription revenue, Linux vendor Red Hat Inc. has named a new CFO.
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Red Hat (Nasdaq: RHAT), provider of Linux software and support, has issued a security alert to its customers. E-mails are circulating, says the company, that appear to come from Red Hat but actually are phishing hoaxes.
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Red Hat has appointed its CFO to replace the sudden departure of Kevin Thompson two months ago. Charlie Peters is the new head of finance at the leading Linux distributor and takes the title Executive Vice President and Chief Financial Officer.
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Linux Journal recently caught up with Mandriva CEO, Fran??ois Bancilhon, to find out more about a recently announced partnership between Mandriva of France and Turbolinux of Japan. read more
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Company co-founder explains why the Linux company chose the name Red Hat.
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New CEO brings passion and an eclectic background as he charts a new course for the Linux developer.
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Blog: I interview Iain Gray, VP of Global Support at Red Hat, to find out how the world's largest open source company structures its support offerings, and how they differ from proprietary software support.