Red Hat still kicking despite intense competition

Linux distributor has grown its market share four years after Oracle CEO Larry Ellison launched onslaught targeting Red Hat's business, says senior exec who points to company's latest positive financial results.
Written by Kevin Kwang, Contributor

SINGAPORE--Red Hat is still a strong presence in the Linux distribution market as its latest financial results prove, declares a senior company executive who noted that the company's success comes despite targeted maneuvers by its competitors, specifically, Oracle.

Alex Pinchev, executive vice president and president of global sales, services and field marketing for Red Hat, told ZDNet Asia in an interview Thursday that the software company has increased its share of the Linux distribution market from 80 percent four years ago to 87 percent today. This growth comes despite of competition from companies such as Oracle and Novell, he said.

Pinchev pointed to Oracle CEO Larry Ellison's claim in 2006 to "kill Red Hat" when he unveiled a new initiative to sell support for Red Hat Linux, at a cheaper rate than Red Hat was charging, and provide its own free clone of the open source OS called Unbreakable Linux. The announcement caused Red Hat stocks to dip by 30 percent.

Oracle just this week also launched its Exalogic private cloud server which combines both hardware and software and is optimized for Oracle's own products. Exalogic, which is available in both Linux and Solaris variants, is designed to support a range of cloud deployments from small-scale applications to the "largest and most demanding resource planning and mainframe applications", the company said in a whitepaper.

Asked about the impact of the launch, Pinchev said such moves by Oracle are nothing new to Red Hat and described it as "deja vu all over again". Despite the intense competition, he said Red Hat continues to grow its market share and has "not lost a customer to Oracle".

He also scoffed at its rival's latest Unbreakable Enterprise Kernel offering which was touted to achieve 75 percent better performance over Red Hat's Enterprise Linux (RHEL) 5-compatible kernel, saying that there was "no innovation there".

"Oracle's kernel, [derived from the stable 2.6.32 mainline Linux kernel], is modified [to work solely with Oracle software] but some of the technologies do not work. We know...We tested it on our own system," Pinchev revealed, adding that these technologies will work on RHEL 6, which is slated to hit the markets at the end of the year.

He also knocked the competitor's track record on innovation, saying: "I don't remember Oracle being an innovative company. It buys a lot of companies...but it is not innovative. I believe the market has lost trust in them."

Strong second quarter showing
The Red Hat executive vice president was in town to announce the company's second quarter results for its financial year 2011, ended Aug. 31, where its total revenue grew 20 percent year-on-year to US$219.8 million. Pinchev added that the company's RHEL subscription revenue reached US$186.2 million, a 19 percent growth over the same quarter last year.

Its Asia-Pacific business currently contributes about 20 percent of the company's total revenue. In comparison, Europe accounts for 24 percent while U.S. makes up 56 percent of overall revenue, he noted.

Pinchev attributed the company's positive showing to an accelerated adoption of Linux among customers migrating from Unix, and a similar uptake of its middleware as the company grows its presence in the global market. The Red Hat Enterprise Virtualization, which includes its KVM hypervisor, has also been another significant driver, with more than 300 customers signing up worldwide since its launch in September last year, he said.

Dirk Peter van Leeuwen, vice president of Red Hat Asia-Pacific, who was present at the same interview, identified China, India and Japan as "key growth opportunities" for the company in this region.

Adoption of its virtualization software has also been "above average" in this region, contributing 30 percent of the company's overall virtualization business, he added.

Editorial standards