Red Hat aims to be the disruptor that aids the disrupted

NATIONAL HARBOR, MD — Red Hat’s history as a disruptor put it in a unique position to help those who are now being disrupted by technology. But, as CEO Jim Whitehurst points out, in an era where “” as replaced “cloud” as the must-have tech CEO keynote subject, the company needs some help to make that happen.

Whitehurst made the comments opening the company’s North America Partner Conference here, saying that from the company’s beginnings in 1993, when it opened with the offer of giving away for free but selling the support around it, it’s been disruptor.

“We had a lot of really big software companies calling us a lot of really bad things,” Whitehurst quipped, making a thinly-veiled reference to Gates-and-Ballmer-era Microsoft, which today as Nadella-era Microsoft is a close partner of Red Hat.

“It’s easy to take a product, and use marketing to make it fit into digital transformation. But we live that transformation every single day,” he said.

That perception, he added, has led to an increasing number of customers coming to it for advice on how to pursue their own digital transformation, both in terms of the technology behind it and in terms of the cultural shifts required. “Our customers see us as a natural partner for navigating disruption,” he said.

And while Red Hat enjoys having those conversation and sharing its own “passion” for that transformation, it is ultimately a software company, and it, itself, is ill-equipped to design and implement customers’ digital transformation strategies at scale. And that’s where he said Red Hat partners have opportunity.

“We are uniquely positioned to talk about what it looks like, and what it feels like, to sovle these problems, and with our partners, jointly, we can make sure they survive, and thrive, and build deep, long-lasting experiences,” he said.

That approach, he said, is in keeping with the spirit of Red Hat over the last 25 years of its history. He said above anything else, Red Hat is an ecosystem company. “The software’s free, so you’ve got have something to sell,” he quipped. But while people think of the software ecosystem the company has built, they do not as often think of the channel ecosystem, the “downstream ecosystem” that Red Hat as built.

“You’re all part of the ecosystem that allows customers to succeed,” he said. “This is a celebration of our joint business, and what we’ve been able to achieve over the last 25 years.”

Partner attendance at the show, he said, is up 25 per cent year over year, growth he said was indicative of the momentum of open source software.

“The majority of innovation happening in technology today is in open source. And that’s not because of Red Hat alone. It’s happening because large IT users are running into technology problems, and they’re coding the solutions.”

Today’s capabilities exist, he contend, because Google wanted to index the Web. AI? On the rise largely because of the likes of Alexa, Cortana, and Siri. 

“There’s a pool of innovation that’s exploding out there, but none of it was written with the enterprise market in mind,” he said.

And that’s where Red Hat continues to see itself adding value, in turning open source projects into “enterprise-hardened” products. Whitehurst stressed that’s not just the original Red Hat model of giving away the software and selling support — a business model he admitted was not very good. He said support is six per cent of Red Hat’s cost structure, and in terms of revenue percentage, support was “pretty similar” to other software companies. That similarity with other software companies is also true of its R&D spend as a percentage of revenues, and that figure continues to grow as Red Hat continues to expand its view as a platform company for a variety of open source technologies.

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