Red Hat's newly appointed chief executive, Jim Whitehurst, has two masters to serve: Wall Street, and the open-source community. Failure to keep either happy will have its consequences, both damaging to his business.
Indeed, as Red Hat's rival Linux distributor Novell found out when it made its controversial pact with Microsoft: what the community gives, the community can also take away, and Novell has since struggled to regain the momentum it attracted following its acquisition of the Suse Linux distro in 2003.
Jim Whitehurst believes he embodies the right mix of credentials for Red Hat. As the former chief operating officer at Delta Air Lines, Whitehurst has a proven background in managing a mature and established business, but also has the geek credentials — he studied computer science at Rice University in Houston, Texas — to win over the community's more zealous elements.
ZDNet.co.uk caught up with Whitehurst, who took over from former Red Hat chief executive Matthew Szulik at the start of this year, at the company's annual conference in Boston to find out what he thinks he bring to the business and what he has learned so far.
When you joined Red Hat what was the main thing you thought you could bring to the company?
I think disciplined execution. Red Hat is almost an embarrassment of opportunities; there is so much that we can do and so much value we can provide in so many areas. All that said, we need to focus and we need to execute and make sure that, the things we do, we fully resource and do well. Also, [as regards] processes and systems: a few short years ago Red Hat was a $50m [£25m] business; now we are a $700m business. It has grown very rapidly but, during that growth, we haven't spent that much time on our processes and systems.
Say if this job didn't work out and you had to go back to Delta Air Lines, what do you think you have learned in the last six months at Red Hat that you would take back with you?
It makes me want to cry, the idea of going back. We have got process and system issues and we have got clear ways to improve those things, but we are still ridiculously profitable. I would much rather have a fantastic business model with execution issues than a horrible business model with flawless execution.
Again, I think I would mainly just be depressed. I think the thing that is most extraordinary to me is — and I was a consultant before with Boston Consulting Group and have worked for companies across the world — I have never seen so many bright, energetic and talented people. Because we have a mission we attract and inspire extraordinary people. I don't know how you bottle that, but it's extraordinary.
A key learning associated with that is that I have been in a situation trying to change culture and change a business model; it is so much harder to change something established than it is to grow something new. Fundamentally, being an attacker now is so much better than being an incumbent — it's incredible.
When you run an airline, you will always get people who go: "You idiot, don't you get it? The Southwest [a US airline] model is the successful model: fly point-to-point, single fleet. They make money and you don't. Why can't you figure this out?" And you look at them and say: "Really, I am not a complete idiot, but I can't get from here to there. I have 10 different fleet types, all of equal size."
I look at some of the older, established IT companies and I think they get where things are going but it doesn't matter: just because you know where things are going doesn't mean you can get there.
What are the ethical restrictions of working for an open-source company? What can't you do that the chief executive of a proprietary software company could do, for example?
Are there some companies out there that I would love to buy that we almost can't? Yes. There is a substantial reduction in revenues that is associated with moving something from proprietary to open. You look at examples where you think: "I would love to have that but, if we buy it, then we have to open it".
We need strategic clarity as part of our culture and who we are, and that does foreclose some options. Over the next 10 years, would [a company] be better open and could we build a business model around it? Yes, probably, but I can't justify a valuation premium now and say I am going to pay based on these revenues and I am going to open source it, providing a lot of value to the customers, but a lot of that value is actually in my revenues declining a lot. Generally, I think the power of consistency in our culture and in our messaging is worth the trade-off.
Did you talk to MySQL before they were acquired by Sun?
Frankly, you would have to ask Matthew [Szulik], as they were acquired within a month of me starting. We have always had a great relationship with MySQL. My concern with Red Hat being in the database business is very simply that most databases run on Red Hat. We performance tune the Linux kernel before it goes out so that it works well with the major databases that people use. Can we really claim that we have performance tuned for your MySQL database or your Oracle database if we are competing with it?
I am not saying that we are never going to do anything that competes with people we work with, but our software works so well with Oracle and MySQL, why [would I] want to get them and customers concerned? To me, there are so many other areas where open source can add value.
You studied in the UK at the London School of Economics and also in Germany, so you are pretty familiar with Europe. Do you see different attitudes to open source in Europe compared to the US?
Absolutely, I think the relative sensitivity around the need for open standards and the power of open source is just much higher in Europe. I think that is a [result] of regulatory authorities that are doing a good job minding the store, and I think the fact that...
...so many of the dollars for licence fees flow to the US means there is always a sensitivity outside of the US, as all those dollars flow to Redmond or Washington more broadly. A lot of the large European companies are the ones that say: "I would love to have 30 percent of my desktops running Linux", much more so than big US companies.
There is also a clear distinction between Eastern Europe and Western Europe. Western Europe obviously has very large, very sophisticated customers, but I think Eastern Europe has huge opportunities because of its extraordinarily well-educated workforce.
Do you think US companies are particularly good at empowering their international business units to act autonomously and take advantage of local conditions? Do you think Red Hat has been good at that in the past? Is it something you can improve?
I think we can certainly improve and we are working hard on that. We started as a small company and had a way of doing things, but I think being more sensitive of ways of doing things around the world is critical. I think we do a better job than most companies, because of who we are and being accepting of different communities, but I think we still have a way to go. Even basic things like channel structures are completely different in Europe, Asia and the US.
Does the patent settlement you announced recently [with FireStar Software] that is consistent with the GPL mean that you are in a better position to be able to settle your patent dispute with Microsoft?
The problem is that we don't know what the Microsoft [patent threat] is. They have said in the past that 235 patents [are infringed by Linux] and we have yet to see what any of them are. Conceptually, it should be possible but, again, we don't know what we are talking about there.
When was the last time you spoke to Microsoft regarding patents?
I am sure, as a company, we have an ongoing dialogue on a lot of things. I have had dialogue at a senior level, but it has been more on how we can work better on interoperability for customers; I haven't had any direct conversations around the patent issue.
On the issue of the desktop — or specifically the mobile client — we have heard rumours that you might be joining the LiMo Foundation. Can you confirm that?
We look at it. We look at it a lot. The problem is: how do you create a business model around it? I have no idea if we are joining that or not but I am sure that, if you chat to some of our guys through the course of the day, they will confirm or deny [it].
We don't sell software; we sell service and support and, as devices are further and further away from something that is mission critical… I want to come back to desktop and why it doesn't make sense for us to do a consumer desktop. I fundamentally believe there are companies that sell hundreds of dollars to millions of people and there are companies that sell millions of dollars to hundreds of people, and there are very few companies that have done both successfully. So, we sell millions of dollars to hundreds of customers — not literally; we have more than hundreds — we are an enterprise company.
Also, I don't see what the market is for a paid, supported Linux desktop. We have a great consumer desktop — it's called Fedora. I love it; I use it at home. I see a lot more opportunity for us in virtualisation and other enterprise components.
However, things have got blurry and we are absolutely focused on the desktop and we are doubling down our investment in the desktop in the enterprise. I think, in the past, we have been blurry and, when people think of desktop, they think of consumer. I think we need to do more on the desktop but, to be clear, it is a desktop for our enterprise customers. I think our enterprise customers want support for the desktop, and that is right in our wheel-house and a core business for us.
Last year, you announced the Online Desktop and Global Desktop products. What happened to those, as we haven't heard much since?
[Whitehurst was not around when these products were announced, so a Red Hat spokesperson intervenes at this point and claims that both strategies are still being supported and that products "take time to appear".]
What I am very clear on is that, being an enterprise company, we have to have a rock-solid enterprise desktop and so I know we are investing heavily there.
So to circle back, what is the position on developing a mobile client?
I would say we are still developing our plans there but, in general, we, as leaders in open source, need to do a lot of things to promote Linux and open source. I don't necessarily see a direct business model there but that doesn't mean that we won't participate and put time and energy against it. But I don't see that as a mainstream part of our business.
I will be frank; we haven't quite figured out how we will be involved, but I look at that more as us being good stewards of open source and Linux, rather than a business model.
Tom Sanders from Webwereld also sat in on this interview and contributed questions to this interview.