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Biztech Aug 14, 2012

75% Customer Wins Replacing Legacy Systems: Red Hat

By Abhishek Raval

With Microsoft recently announcing a new wholly-owned subsidiary (Microsoft Open Technologies, Inc.) to allow it to engage in open source projects, analysts are busy speculating what this means for the existing open source vendors. However, Paul Cormier, Exec. VP, Products and Technologies, Red Hat, seems unperturbed by this recent turn of events and terms it a great thing. “I think in some sense it was inevitable, and it is a sign of Microsoft publicly acknowledging that open source is a part of mainstream computing environment,” he adds.

For now, Red Hat is confident of its headway in the open source battleground. The enterprise class open source player has seen 25 percent growth in each of the regions globally and believes that its offerings are being looked at positively by the Indian enterprise community too.

“Even though I have been with Red Hat for many years, my deputation to India happened about 18 months back. I realised that we already had a huge base of current and potential customers,” observes Anuj Kumar, GM, Red Hat India. The current clientele helps in the renewals part of the business but then there is also a segment of customers that has tasted the success of Red Hat but hasn’t been able to completely exploit its value proposition. It’s also a question of enabling the channel ecosystem, sales teams to then service that demand.

Eating Into Competition

The company claims that of the total business it bagged in the last quarter, 60 percent was from the customers who displaced their current products with Red Hat’s offerings. “We are having an insatiable demand. Roughly, three out of four customers bagged by Red Hat are displacing one of their legacy systems,” says Kumar. Kumar further explains the two factors that are still mainstream business for them: most of the current customers are displacing either a proprietary Unix system if it’s a server or Infrastructure service or another legacy middleware product like Weblogic or Websphere, which is then displaced by JBoss.

When asked about the source of the demand and whether a particular business vertical is having a larger share, Kumar states that none of the business verticals contribute more than 10 percent of their revenues, which means an optimal mix to have with no dependency on specific verticals to adopt Red Hat’s technology and make it mainstream.

Red Hat’s Play

“Where we play in the stack, is deep down in the middleware and hardware layers and not in the application layers. Those are the layers that are same across verticals,” says Cormier. The company intentionally plays there not only for the reason that it suits from the business perspective but also because it is conducive to the open source development as there is wide interest across all verticals in those spaces.

“In India, I feel the operating system still has a lot of growth opportunity from an enterprise perspective. Middleware is right behind it. Now that there are teams in place we can now move middleware and also virtualisation technologies. A faster ramp up of our organisational base in India will result in quick adoption of some of our newer products,” states Cormier.

One such product is OpenShift, Red Hat’s application on a Platform-as-a-Service (PaaS) model, which runs applications in a secured manner on the cloud computing platform. It’s important to note here that most of the work on cloud is happening in the applications space, which is more portal and internet based, and thus security is an issue. However, Cormier claims that OpenShift has the ability to create virtual machines and securely run applications in containers. “VMware doesn’t hold this capability because they don’t have an operating system, and thus relies on us or Microsoft for running applications in containers,” he adds further.

In Red Hat’s case, C Groups (control groups) and Security Enhanced Linux (SE linux) can be integrated with the KVM hypervisor for better security. VMware can’t do that because they have a closed source Hypervisor. Also, VMware doesn’t have a middleware or an OS, and those are the pieces that applications run on top of. “We are able to do that only because of the capabilities from Red Hat Enterprise Linux (RHEL 6),” informs Cormier.

Betting On The New Wave Of Computing

Cloud computing, the next generation computing, is in most parts built on open source technologies. “The next wave of technology is built on our products,” says Cormier. There is a growing momentum towards clouds built the open source way. Outside of Microsoft Azure and VMware, all other cloud platforms like Salesforce.com to Amazon run on open source technologies, thus giving an edge to open source vendors like Red Hat.

by Abhishek Raval

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