Red Hat: Staying on Course

By Brian P. Watson Print this article Print

Customers have stuck with Red Hat, despite growing competition.

The announcement that Novell and Microsoft were collaborating to boost interoperability between their platforms and other products may have shaken up the software world, but, by all indications, it hasn't rattled Red Hat, the open-source market leader.

Tim Yeaton, Red Hat's senior vice president and general manager of enterprise products, says the deal, announced in November, clarifies the differences between the open-source rivals. One of those glaring differentiators, he says, is that Red Hat is the one true open-source provider in the two-way race.

"Red Hat is not and has never been a proprietary software company," Yeaton says, comparing it with Novell, which also sells proprietary enterprise software. "We're about a complete open-source infrastructure, end to end."

Raleigh, N.C.-based Red Hat currently holds a market share of 53%, according to Evans Data Corp. In the past two years, the company's revenue has more than doubled, topping $400 million for fiscal year 2007.

And Red Hat says that despite the Novell push and the defection of customer Wal-Mart to the new alliance plenty of new customers are coming its way. In the last quarter of fiscal 2007, the company reported 10,000 new customers. For the year, Red Hat says it signed on more than 42,000.

On top of these additions, the company says most longtime customers are holding tight. One of those is Fiserv Investment Support Services (Fiserv ISS), a Denver financial services firm.

In July 2006, when Helen Z. Cousins came on board as chief information officer, the company was running Red Hat Enterprise Linux on 35 servers to handle, among other things, its data mart. Within a year, that number rose to 98. Red Hat's platform now runs all of the firm's trading, accounting and transactions systems.

With mission-critical applications relying on Linux, uptime is a must, says Dave Neitz, Fiserv ISS's vice president of information-technology asset management and architecture. And in the past year, he says, the Red Hat platform hasn't had any notable performance problems.

Same goes for Bill Carter, project manager for information-technology development and engineering with Liberty University in Lynchburg, Va.

Last year, Liberty rolled out what Carter calls one of the school's most critical applications, Blackboard, which manages course enrollments and content sharing. Carter says Liberty hasn't had any problems with Red Hat Enterprise Linux since deploying it in 2004.

Others, like Curtis Edwards II, information-technologies director for Pottawattamie (Iowa) County, reinforced their satisfaction with the vendor. The county uses Red Hat Enterprise Linux to run its private branch exchange system, as well as database-searching and document-imaging systems.

The imaging projects were of particular note, Edwards says. They focused on creating digital copies of historical information maps, deeds and county board minutes dating back to the 1840s. "That's great information to have," he says. "But if you ever were to lose it in a fire, for example , what would you do?"

With Red Hat already in place, the county avoided having to spend up to $10,000 on new servers to handle the scans, Edwards says. Red Hat runs a MySQL database that stores the images.

Plus, he says Red Hat offers sweet deals to public organizations like Pottawattamie. For 15 copies of Enterprise Linux, Edwards says he pays less than $5,000 annually for support. (The product's list price ranges from $349 a year per two processors, to $2,499 for an unlimited number.)

Given the reliability and cost savings, Edwards says he'll consider Linux for any new project: "If it's something where we can use open source, we're going to look at it long and hard."

At A Glance

(919) 754-3700

PRODUCTS Enterprise Linux 5 Server, released in March 2007, is based on the Linux 2.6.18 kernel and includes virtualization.


2007FY 2006FY 2005FY
Revenue $400.62M $278.33M $196.47M
Net income $59.91M $79.69M $45.43M
R&D expenditure $71.04M $40.88M $32.47M
Fiscal year ends February 28.

This article was originally published on 2007-05-14
Associate Editor

Brian joined Baseline in March 2006. In addition to previous stints at Inter@ctive Week and The Net Economy, he's written for The News-Press in Fort Myers, Fla., as well as The Sunday Tribune in Dublin, Ireland. Brian has a B.A. from Bucknell University and a master's degree from Northwestern University's Medill School of Journalism.

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