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Red Hat takes application development to the bank

Matt Asay | June 29, 2016
The open source juggernaut's remarkably steady growth depends less on Linux every year

While that latter revenue is still just 17 percent of total revenue, it's growing much faster, pointing to a Red Hat that depends less on Linux every year.

Where do we grow from here?

Given the importance of cloud to enterprises and the seemingly unstoppable juggernaut that is Amazon Web Services, Red Hat needs growth to come from its cloud businesses. Of the two -- OpenShift and OpenStack -- OpenShift looks more promising.

OpenStack is generally going to serve the laggard, i.e. the company that isn't quite ready to do cloud right and go all-in on public cloud. I'm inclined to believe that hybrid cloud is a transitional phase for enterprises as they get comfortable with the cloud, and that paints a rather dim future for OpenStack.

That's not to say Red Hat won't cash in on these Nervous Nellie cloud buyers. They will. But my bet is on OpenShift to drive Red Hat's cloud business long term, because it delivers an AWS-like experience. While most of Red Hat's OpenShift customers still use it on-premises, that will change as they grow comfortable with the cloud.

At any rate, although Red Hat "announced more new customers at OpenStack Summit than everybody else combined," according to CEO Whitehurst, those customers aren't yielding real money. Not yet. Whitehurst said that Red Hat's OpenStack revenue is still "quite small," and almost "immaterial." While the company definitely has customers in production, "rarely do you see a $1 million initial deployment of OpenStack."

Regardless, Red Hat is now on the path to $5 billion in annual revenue, a number Whitehurst has said the company can hit with its current product mix. Given that the world increasingly builds with open source infrastructure, that's a pretty safe bet.

Source: Infoworld 


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