Red Hat: Bringing profitability to open source

newsmaker CEO and self-confessed geek, Jim Whitehurst, believes his relative youthfulness and inclination to tinker with gadgets has helped him rally organization's "socially connected workers" and developers to become open source's first billion-dollar business.
Written by Kevin Kwang, Contributor
Red Hat CEO

newsmaker His age and self-professed geek background has helped CEO Jim Whitehurst rally Red Hat's younger, more "socially connected" workforce and developers to become one of the first "21st Century companies" which, Whitehurst hopes, will help him reach his goal of achieving US$3 billion in sales in five years' time.

The 43-year-old executive, who in December 2007 took over the reins of what is now the biggest open source vendor in the industry, said what defines a 21st Century company is one with a significant number of workers who are "socially connected" through sites such Facebook and Twitter, and is governed by "meritocracy, not hierarchy".

By virtue of being in the open source space, Red Hat has many young employees who are generally early adopters of technology and this is a demographic that he has helped lead by influence and example.

"I've always said to them that they can call me an idiot when they think I'm doing something wrong--and many have done so--and this has helped us thrash things out and be innovative," said Whitehurst in an interview Wednesday with ZDNet Asia.

Besides his take on management, the CEO also discussed why he sees the next cloud battlefront emerging at the platform-as-a-service (PaaS) level and how it is looking to grow its Asia-Pacific presence.

Q: How do you see the open source market developing now that Red Hat is on its way to becoming the first billion-dollar open source business?
Whitehurst: The size of open source is dependent on definition, whether it is viewed in terms of revenue or installed base. If revenue is the yardstick, then open source is still small compared with other traditional IT stack. As for installed base, Linux is now bigger than all Unix installations in the market today, which makes our share of the market massive.

Our business opportunities today are also increasing because of cloud computing which has its roots in open source. Companies such as Amazon and Facebook started the ball rolling when they took existing free source codes and put it together to solve existing market problems, and now enterprises want to do the same for their customers.

I view open source as the predominant place for innovation today, particularly around big data which has been much talked about since last year.

So are there plans to introduce big data tools into your portfolio of products?
Like I said, there are lots of innovations going on in this space and it would be a logical extension for Red Hat to include big data and analytic tools, but we have not said we are looking to bring this to market yet as we would first have to identify its business case.

But, to elaborate on the appeal of big data, it is becoming very compelling for many companies. Let's take the banking industry, for example. I know of a bank in the U.S. in which they are analyzing the banking behavior of all their customers in real-time. So if one of its customers decides to buy a golf ball and upon handing over his credit card, realizes his limit is reached and he requests for a credit line extension. The bank's system will red-flag the action as something that is out of the norm for that customer and request additional verification.

Big data is increasingly being seen as a tool that if not adopted, one's business might be left behind, and the development behind such tools is run on open source development platforms such as Hadoop, which is run on Red Hat Enterprise Linux (RHEL) machines.

Within cloud computing, Red Hat recently introduced OpenShift--a PaaS offering--which is a departure from the company's IaaS products. What are your cloud computing ambitions and how far up the stack will you go?
You're right in that with OpenShift, and our participation in the Open Virtual Alliance (OVA), we appear to be climbing up the stack.

Having said that, we have always been in the infrastructure commoditization business where we identify areas that can be packaged together and bring these to market. This is our strength. This strength might not necessarily translate if we have to provide tailored business solutions through software-as-a-service to our customers. After all, open source is more about being broad and big in scale and not narrowed into serving specialized needs.

On OpenShift, this demonstrates our view on how applications need to be mobile and able to be deployed in different platforms and environments. It is not possible for IT managers to be able to manage their infrastructure if they have to deploy apps from different vendors that can only run on their platforms--their minds will explode!

Alternatives such as Amazon's Elastic Beanstalk do not solve this challenge as developers will still have to deploy their apps on its infrastructure, which makes it a closed environment.

VMware had also brought to market its CloudFoundry PaaS offering. With its dominance in the hypervisor market, will this factor strongly in developers' decisions?
I think the industry is speaking out against VMware's dominance in the virtualization market, and this can be seen with OVA. Any time you see IBM and Hewlett-Packard on the same team and saying "Go KVM (kernel-based virtual machine)!", you'd know that this signals a change in market direction.

That said, it's up to the developers to choose which platform they want to develop on, and within the enterprise arena, this would mean the ISVs (independent software vendors) and in-house IT professionals. For these groups of developers, they don't even think about virtualization as a factor for their platform choice. So, no, we don't think VMware's dominance will impact the growth of OpenShift's ecosystem. In fact, we think the OVA and KVM will eat away at ESX's market share.

In the long-term, I believe the next cloud battlefront would be in the PaaS layer as more IaaS vendors look to abstract the task of development from which platform to deploy on. As far as we are concerned, we believe our approach is unique relative to others.

Looking at Red Hat's businesses in Asia-Pacific, what is the main challenge in growing your presence here even as it is recognized as the fastest-growing region in your recently released first quarter results?
What I'm seeing here is what was happening in the U.S. three years ago in that, companies are now asking us whether our RHEL system is able to run mission-critical applications. To these queries, we point to our track record of servicing stock-trading markets and the financial services industries where we deal with mission-critical work processes daily.

Generally, the region's developing markets are also behind in understanding and utilizing open source products. To address this, we're looking to improve our market education efforts and beef up our partner channels.

I also believe the largest macro trend driving the technology industry is inertia. Not sneezing on existing technologies and maintaining the status quo is ultimately safer and cheaper, with many not considering alternatives until it is time to refresh the system.

From what we're seeing, though, there's a growing sense of inevitability that more companies will incorporate open source into their IT infrastructure sooner rather than later.

In a 2008 interview with ZDNet Asia's sister site, CNET News, you revealed that you're a geek. How does being one, and a relatively young one at that, help you in managing Red Hat since you took over leadership?
I like to think that Red Hat is one of the first 21st Century companies today in which there is a growing group of young, socially connected employees who are used to collaborating and sharing ideas online, and one that believes in meritocracy rather than hierarchy within the organization. This dovetails nicely with the fact that we are an open source company, and tend to attract the young and early adopters of technology.

I hope that the imprint I've left on the company is the ability to lead and influence this group by example. I'm one that looks to seek consensus in decision-making. I've always told them to call me an idiot if they think I'm doing something wrong, and many have! These things encourage people to share their ideas, thrash things out and be innovative.

And I guess my "geekiness" allows me to connect with the developers better and gives me some "cred".

For instance, I've been carrying a MacBook when I travel because it's the lightest laptop but I've been trying to run Fedora (a Linux-based operating system) on it. It's taken quite some time and it's been painful, but I finally got it to run! That's satisfying.

Lastly, how do you, as a CEO, juggle your ambition of growing the business with having a healthy family life with your wife and two kids, especially when you have to travel regularly?
It is difficult, difficult, difficult! It is probably the hardest job juggling these responsibilities.

If I have to travel, I try to bring my family along--school and other commitments permitting. For example, my wife, to whom I'm married for almost 15 years, and our 9-year-old twins have followed me on my trip to Asia which included stops in China, Australia and Singapore. I also work very hard when I'm on work trips so that I keep to my schedule, and limit the days I'm away from them.

And even though I have a lot of work to do, as the CEO, I also have the leeway to do it according to my schedule so that helps.

There are a lot of compromises as well. I used to golf quite a lot, but these days I tend to spend my time with the family instead.

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