Red Hat CEO outlines new strategy

Red Hat (Nasdaq: RHT)CEO Jim Whitehurst is coming up on his five-year anniversary at the helm, following his arrival in December 2007. Under Whitehurst’s leadership, Red Hat’s revenue has grown from US$523 million in its fiscal 2008 to more than $1.1 billion in its fiscal 2012, without deviating from its core strategy of open-source infrastructure software.

In an interview this week at the Red Hat Summit conference in Boston, Whitehurst spoke on a variety of topics, including his company’s role as a “commoditizer” of technologies, why Red Hat is staying away from the applications business, and his view of how Oracle is handling the stewardship of Java.

CDN Now: You mentioned in your opening keynote on Tuesday that cloud computing is best compared to nuts and bolts: engineered, pre-made tools that enable innovation on top. Red Hat seems to be in the nuts-and-bolts business with products like your OpenShift PaaS (platform as a service), so how do you avoid becoming a commodity yourselves?

Jim Whitehurst: A lot of times, we are the commoditizers. So we’re happy to play that role. We have a production system built on open source which allows people to create great software at a very, very low cost. Which allows us to commoditize and still be profitable. So we’re actually kind of proud to be the people who are helping to commoditize. It started with compute with Linux, another level of abstraction with JBoss and our application platform, and now we’re doing it with storage with Gluster, and ultimately we’ll try to do it with the whole cloud.

CDN Now: Red Hat remains a committed infrastructure vendor, whereas your competitors in this area, such as IBM, have been moving into some types of business applications. Why have you stayed out of that business?

J.W.:In any company you have to figure out what your core source of differentiation is and we think it’s that we know how to leverage open source to deliver excellent enterprise software. Open source generally does well where there are broad, standardized use cases, such as operating systems. As soon as you march up into application functionality, that’s more specialized. Building broad communities of use to build something is really, really hard. I know some people are trying, there is open-source CRM and some of these other categories out there. But I think building a community to contribute to top-quality applications is really difficult. Also, one of the things we do is long-life support, certified hardware, certified applications around our infrastructure. All of those things have value. As soon as you’re at an application layer, those things have a little bit less value. But mostly it’s about the difficulty of building a community around vertical applications.

CDN Now: Red Hat and other open-source companies like to talk about how much money their customers can save compared to buying products from proprietary vendors like Oracle, IBM and SAP. But how does this notion of saving customers money interact with your responsibility as a public company with delivering growth every quarter?

J.W.:It depends on what role you’re trying to play. We are in the business of taking share in various established product categories. Yes, we’re a fast-growing company, but if you look at how we grow … the way we do that is by offering better value. By keeping the price low, it allows us to take share faster, which allows us to generate more revenue and grow. So it’s very different than if we were in an established category and we have 70 percent share. If I lower the price, then I can’t grow as fast.

CDN Now: Red Hat relies on open-source databases like MySQL for its product lineup, but the company doesn’t have its own traditional relational database offering. Why is that?


It’s something we obviously have looked at a number of times, and I don’t think there’s something necessarily wrong with the core database business. The problem is that selling only on price isn’t enough. To go in and say we have a database almost as good as Oracle at a tenth of the price is still a tough sell. The reason Linux did well isn’t that Linux is cheaper than UNIX. It’s faster. With JBoss, it’s not that it’s cheaper than [IBM] WebSphere or [Oracle] WebLogic, it also requires a much smaller footprint. Therefore, you can collapse a whole set of computing resources and management around that. The problem on the database side is Oracle has a really damn good database. It’s not that there aren’t really good open-source databases out there, but at least in the traditional SQL world, there’s no open-source database that has 10 other features that Oracle doesn’t have. Now, on the NoSQL side, I think some of those could be quite interesting. It’s something that we look at, I think the guys at 10gen are doing a great job. Some of those could be very, very interesting, but the time’s just never been right for us to find the right fit.

CDN Now: Still, isn’t a lack of your own database sort of a big hole for a PaaS (platform as a service) vendor like Red Hat?

J.W.:We really sell choice, choice, choice. So our virtualization supports Windows and Linux. Our application server runs on Windows as well. Because we offer choice at every layer, we’re not trying to say buy this whole monolithic stack from us. So the fact that we don’t have the database and we partner with a lot of others to provide that, I think that works fine for us.

CDN Now: Red Hat also relies heavily on Java, which is controlled by your competitor, Oracle. What’s your view of Oracle’s stewardship of Java?

J.W.:We are watching [Oracle’s handling of Java] closely. I don’t think anything’s happened thus far that really concerns us, but we want to watch it carefully.

CDN Now: Google was largely exonerated in the lawsuit Oracle filed against it over Java intellectual-property violations in the Android mobile OS, although Oracle plans to appeal. What was your reaction to that?

J.W.:I was very pleased. I think that’s important. If Java’s going to be an open standard that people use, it can’t tied up on a whim. So we were pleased to see that’s where the courts came out.

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