Saturday, 31 March 2012 12:59

Red Hat crosses billion-dollar revenue mark

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Free and open source software market leader Red Hat has marked a decade of Linux leadership in the enterprise by reporting revenue vastly exceeding analysts' expectations.

The free and open source software vendor reported fourth-quarter earnings of $US297 million this week, taking it beyond the billion-dollar mark in revenue for the fiscal year.

As a result, its stock rose by nearly 20 per cent to $US61.43. While its market cap, at $US12 billion, is nowhere near that of giants like Oracle ($US146 billion) or IBM (US$241 billion), its stock has outdone both these companies by a big margin.

Over the last three years, Red Hat's stock has gained 262 per cent compared to 63 per cent for Oracle and 121 per cent for IBM.

But behind the financial success is another story. Red Hat has stayed true, for the most part, to its free and open source ideals, and nurtured the community which has produced the software which it sells.

For example, its contributions to the Linux kernel far outweigh those of other companies that sell free and open source software, and its support for the community is second to none.

From being a clumsy operator on the media front, Red Hat has matured into a company that understands the art of spin. It has realised that as the company grows bigger, its profile has to change. Never mind if hackers are still bringing in the bacon.


On its website, Red Hat has pictures of four people - a Caucasian, an African, a Chinese and an Indian. The right image, one of a multicultural company, is projected - and in Brisbane, the company lives up to this, with the mix of staff at this branch co-ordinating activities in the major growth markets of India, China and South Korea.

The strengths of these countries - the programming talent in China, the abundance of people used to dealing with language issues in India, and the embedded device skills in South Korea - have been marshalled to help in consolidation.

Red Hat has also managed to nurture in its ranks numerous people who are leaders in their own communities; this feeds into the public space in a positive way.

When it comes to free and open source software, a cut-throat company cannot, at times, stomach the idea that source has to be provided to someone to whom the software is distributed. It is something like giving the family jewels away to everyone to whom a sale is made. But while umpteen companies play fast and loose on this front, Red Hat has never tried to do so.

Perhaps the best example of its tolerance is the fact that one can get the same enterprise distribution that it makes from a different source, minus the trademarks. CentOS is freely downloadable and yet it has not put a dent in Red Hat's balance sheets.

There is a lesson somewhere in that for many of the other free and open source software companies that become overly anally retentive when success is elusive.


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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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