Red Hat: Company profile

Open source is on the march and it's set its sights on enterprise: All you need to know about Red Hat
Written by Tim Ferguson, Contributor on

Open source is on the march and it's set its sights on enterprise: All you need to know about Red Hat

silicon.com profiles open source software company Red Hat and takes a look at its technology, strategy and acquisitions.

Red Hat has helped bring open source out of the geeky world of the hobbyist and made it a force to be reckoned with in the enterprise software market - making it possible for companies to run their business on software created in a public, collaborative manner.

The company's business is based on selling subscriptions to businesses for access to its range of open source operating systems and middleware, as well as consultancy and support services. Red Hat now offers a lot more than a Linux distribution, which is where the business began, and is aiming to reach $1bn in revenues within the next few years.

Why use open source software?
Red Hat argues that open source creates better software, faster and cheaper because of the giant collaborative effort between developers across the globe. It argues that the transparency and availability of the underlying source code - compared to proprietary software - means if customers are unhappy with one vendor, they can choose another without overhauling their entire infrastructure: that means no more technology lock-in.

The Red Hat story
Red Hat started life in 1994 when Carnegie Mellon University graduate Marc Ewing created his own Linux distribution, called Red Hat Linux, the name a result of Ewing's penchant for wearing a red hat as he walked around the university campus.

Red Hat's headquarters in Raleigh, North Carolina

Red Hat's headquarters in Raleigh, North Carolina
Photo credit: Red Hat

Red Hat Software was created one year later when Canadian entrepreneur Bob Young bought Ewing's business and merged it with his Linux and Unix accessory business, ACC Corporation. Young was CEO until 1999 - the year in which the company went public - and was succeeded by Matthew Szulik. Jim Whitehurst took over as CEO at the end of 2007 although Szulik remains as chairman of the company's board.

The company currently has around 3,200 employees and customers include the New York Stock Exchange, Merrill Lynch, Credit Suisse, DreamWorks, Morgan Stanley and Charles Schwab.

Red Hat's acquisitions
Szulik oversaw Red Hat's expansion from Linux provider to a middleware company. The $420m acquisition of middleware provider JBoss in June 2006 allowed the company to release the Red Hat Application Stack which integrated the JBoss middleware technology, adding an important string to Red Hat's bow.

The company also acquired virtualisation tech company Qumranet for $107m in September 2008. This acquisition gave Red Hat access to virtualisation technology via the KVM virtualisation platform and virtual desktop infrastructure technology.

Other acquisitions include 2007's purchase of the Metamatrix data services platform, which is now part of the JBoss middleware family, and IT consultancy Amentra in 2008.

Red Hat's operating systems
Red Hat's enterprise technology includes Linux operating systems, middleware and virtualisation for businesses.

The fifth version of the Red Hat Enterprise Linux operating system comes in...

...desktop and server flavours. Version 6.0 of Red Hat Enterprise Linux recently entered its beta phase.

There are three versions for server: Red Hat Enterprise Linux Server, Advanced Platform and Red Hat Enterprise Linux for Mainframes.

Red Hat Enterprise Linux Server is the basic version, which the company says has been developed to perform better in virtualised environments. It's also interoperable with Microsoft Windows Server 2008 R2.

Advanced Platform adds clustering capability, in-built virtualisation technology, dynamic resource allocation, live migration and load balancing. The Mainframe version allows organisations to use Red Hat Enterprise Linux across the entire IT infrastructure from personal computers to mainframe. Subscriptions for this version are available for IBM System z mainframe systems.

There is also a desktop version of Red Hat Enterprise Linux for PCs and laptops. Red Hat's main selling point with the desktop version is lower acquisition and deployment costs compared to proprietary software, which frees up more money for businesses to invest.

Red Hat's middleware
The JBoss middleware is also available in different versions split between platform and framework products.

Platform versions include JBoss Enterprise Application Platform on which Java applications can be hosted and scaled and the JBoss SOA platform, designed to improve the speed and quality of integrated businesses processes.

Red Hat Enterprise Linux start-up page

Red Hat made its name distributing its own brand of Linux which continues to be a major part of the business today
(Screenshot credit: Red Hat)

JBoss Enterprise Frameworks includes the Hibernate relational query technology and the Seam application framework for building web 2.0 applications. The JBoss Developer Studio is an open source application development environment.

Red Hat's virtualisation and management
Red Hat's open source virtualisation technology is available for desktop and server and the company also offers technology for managing infrastructure, desktops and virtual environments.

There are two management products: Satellite allows users to manage their Linux environments while the JBoss Operations Network allows customers to do the same with the middleware layer.

Infrastructure tools include Red Hat Global File System to manage server clusters and Red Hat Cluster Suite which provides load balancing and application failover.

How does Red Hat's software development process work?
Software is developed in collaboration with the Fedora (for Linux) and JBoss.org (for middleware) open source communities, and then Red Hat takes versions of the software and certifies them for enterprise use.

Looking at Linux, Red Hat works closely with the Fedora open source community which encompasses more than 50,000 development projects.

Every six months, Red Hat will select a version of the Linux operating system, which it then offers to customers in hardened and certified form. Red Hat VP and general manager for EMEA, Werner Knoblich, likens Fedora to a "sandbox for our Linux".

Red Hat has more than 1,200 software engineers working on Linux and...

...the code they produce goes back into the Fedora community. As it's open source, the code can be used by anyone - including rival software companies.

An example of this open source work is a project with the US National Security Agency which produced SELinux which allows users to define who can access what information - and which is part of the Red Hat Linux kernel. Another project saw Red Hat develop an advanced messaging queuing protocol for financial trading with investment bank JP Morgan.

Red Hat's current strategy
Analysts are broadly in favour of Red Hat's subscription model, whereby customers get access to the certified open source technology but also services.

Quocirca's Bob Tarzey added: "[Red Hat] has carved out a niche in the open source distribution market and has no close competitors in this space, it is a direct competitor for Microsoft in the server space and has been instrumental in Linux surpassing Unix."

Freeform Dynamics analyst Jon Collins said Red Hat's current strategy is serving customers well by providing a consistent technology while also embracing new developments such as virtualisation. He said the company's position as a software vendor is maturing as it successfully integrates new technology and expands its product portfolio, creating the customer view that they're buying Red Hat software rather than open source software.

Collins told silicon.com: "Open source brings a number of things to the party but that isn't the thing that people are buying - people are buying robust software from reliable vendors. They're not buying it because it's open source, they're buying it because it's Red Hat."

He argues Red Hat isn't trying to oust the likes of Oracle or Microsoft. What it is doing is looking for "sweet spots" to provide commodity software to serve specific needs of enterprises.

An example of these sweet spots is the company's recently launched cloud development tools to help businesses move Red Hat technology into private and public cloud deployments. Cloud computing is becoming much more mainstream and Red Hat is making sure it addresses growing customer demand.

Future developments
Red Hat's aim is to hit revenues of $1bn in the near future through an increase in existing investments and the acquisitions of new customers.

As mentioned above, cloud computing is likely to be a focus. The company isn't providing cloud computing processing power or storage - like Amazon or Microsoft - but more a means to help businesses move into this type of software provision.

Red Hat Cloud Foundations is a set of tools and reference architectures to simplify the building, deployment and management of Red Hat technology in the context of public and private clouds. It also includes training and professional services to help businesses plan and implement cloud technology.

Freeform Dynamics's Collins feels there is no radical change in approach needed by the company and that the real objective should be to sell technology to new customers and broaden the company's reach to cover new verticals with new variations on the technology it already has.

The only area which Collins suggested Red Hat could really expand into is...

...database technology. Like Oracle is now able to do with MySQL, Red Hat could offer certified versions of open source databases to customers.

Bill Tarzey of Quocirca agreed with this and added Red Hat could have benefited from acquiring MySQL before Oracle made it clear it would keep the open source database technology in the wake of its acquisition of Sun.

"So perhaps [Red Hat] will look around for more management tools and maybe security products. It has plenty of room for growth in a strongly growing datacentre market, about [a third] of servers run Linux," Tarzey said. He also speculated that Red Hat could potentially make a play to buy Novell to expand its presence in the open source and virtualisation market.

Red Hat aims to boost revenues by addressing customer

Red Hat aims to boost revenues by addressing customer "sweet spots" related to its current product portfolio
(Screenshot credit: Red Hat)

Ovum analyst Laurent Lachal suggests Red Hat needs to develop its software management products further in order to offer customers all of the tools they need: "They've always had management ambitions but never really delivered on that."

With the addition of virtualisation and now cloud computing technology, Red Hat needs to extend the technology it has for managing these environments to make sure customers can make the most out of the technology, Lachal argued.

Lachal added Red Hat is being "quite tentative" in its approach to virtualisation - particularly in the development of desktop virtualisation - so needs to develop more capabilities in that area, although Red Hat would point to its acquisition of virtualisation company Qumranet in 2009 as a result of which it now offers its own hypervisor to customers for server and desktop virtualisations.

On Red Hat's cloud computing strategy, Lachal said Red Hat needs to focus less on Linux and take a close look at optimising the JBoss middleware for cloud computing. He added that the company could also look at offering a private cloud platform in order to exploit the growing area effectively.

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