Red Hat: Still Savvy

By Brian P. Watson  |  Posted 2006-07-06 Print this article Print

Red Hat sells and supports open-source Linux software, which Google has been using to build and run its operating system.

Forging ahead with the same business model for more than 12 years might seem old hat to some in the constantly changing world of information technology, but business customers say Red Hat wears it well.

The Raleigh, N.C.-based firm has been selling and supporting open-source Linux software since its founding in 1993. Aside from Google, Red Hat's customers include Amazon.com, Lehman Brothers and Yahoo, and most buyers continue to tip their fedoras to Red Hat's support and pricing.

But while Red Hat has plenty to brag about—its revenues are up more than 80% annually in the past two years, and the company recently acquired open-source middleware company JBoss—some customers say competitor Novell and its SUSE Linux software is nipping at Red Hat's heels.

But the JBoss acquisition helped strengthen Red Hat's relationship with Fiserv Investment Support Services (Fiserv ISS), a Denver-based financial services firm.

Fiserv ISS needed a platform to run its new data warehouse and turned to Red Hat. Rick Kendall, the firm's chief information officer, says Red Hat delivered on the promise of high-level support and consulting throughout the project. And Red Hat's Enterprise Linux worked with two back-end systems that Fiserv ISS had inherited when the company was created from four smaller firms.

The company had also been using a JBoss application server, but having both the Red Hat and JBoss products under one roof was a plus for Kendall. Today, Fiserv ISS has 35 different servers running Red Hat software, and Kendall says he'll expand the deployment over the next five years.

"This is core blocking-and-tackling technology infrastructure that has to work," Kendall says. "And it has."

The City of Chicago is another happy customer, though platform architect Amy Niersbach says Novell appears to have made improvements, such as running Oracle databases and improving its support, since three years ago, when she opted for Red Hat.

In 2003, the Windy City started a pilot program with the Red Hat Enterprise Linux platform to power the city's Business & Information Services Department, which supports enterprise applications throughout Chicago.

Niersbach and company replaced older Sun Solaris servers and installed Red Hat on DL580 G2 servers from Hewlett-Packard. She says the $65,000 she pays annually for Red Hat licenses and support on 65 servers is one-fourth the price of competitors' products. She also says the Red Hat products have needed little or no maintenance since installation.

Jonathan Minter, director of information-technology development and engineering at Liberty University in Lynchburg, Va., bought into Red Hat but isn't 100% sold.

Minter, charged in 2004 with creating a more manageable environment for the school's bustling Web operations, opted for Red Hat because of its reputation for efficient Web serving and its Global File System, an operating system feature that manages server clusters like the ones in the school's new storage area network.

The tool helped cut the number of hours per week needed to manage the environment to 5, from 15 to 20, since the project was completed in April, according to Minter. He also credits Red Hat's consultants with teaching his team about the software's ins and outs.

Still, despite a positive experience with Red Hat, Minter says he's keeping his eye on Novell SUSE Linux—which has added a server management tool—and other competitors. "We're a Red Hat campus for now," Minter says. "Not saying we'll be a Red Hat campus forever."

Red Hat: At A Glance

1801 Varsity Drive
Raleigh, NC 27606
(919) 754-3700


Matthew J. Szulik
Chairman, CEO & President

Paul Cormier
EVP, Engineering

Enterprise Linux 4 gives businesses an open-source computing platform on a subscription basis, with new versions released every 18 months. Global File System manages and connects clustered servers.
Reference Checks

Fiserv Investment Support Services
Rick Kendall

City of Chicago
Amy Niersbach
Platform Architect
(312) 744-8735

Heritage Propane Partners
Mark Wilson
Dir., I.T.
(406) 442-9759 x151

Liberty University
Jonathan Minter
Dir., Engineering and Development


2006FYTD 2005FY 2004FY
Revenue $278.33M $151.13M $82.41M
Net income $79.69M $45.43M $13.73M
R&D spending 82.6% 80.4% 72.8%

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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