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Red hat CEO Jim Whitehurst

Red Hat CEO Jim Whitehurst
Source: Red Hat

SAN FRANCISCO — Which of these doesn’t belong: Facebook, Twitter, YouTube and Red Hat. If you said Red Hat, the company’s CEO would beg to differ.

“These are all about the power of participation and collaboration, and Red Hat is the open source version,” said Jim Whitehurst, the company’s president and chief executive, during a keynote address here at the Software Summit sponsored by the Software & Information Industry.

One of the next big targets for Red Hat (NYSE: RHT) is cloud computing. “Other than Microsoft (NASDAQ: MSFT), I find it hard to believe many clouds are running anything other than Linux,” Whitehurst said.

And being a premier Linux supplier, Whitehurst smells opportunity. “I don’t have firm data, but when a customer is building a greenfield infrastructure, our implementations are drastically higher,” he said. “Clouds are fundamentally new infrastructure. Why lock yourself into something proprietary?”‘

He said Red Hat was working with a number of customers developing “private, semi-private and public clouds.”

During his talk, Whitehurst gave a spirited defense of the open source model in general and Red Hat in particular. He noted IDC pegged the server operating system market at a little over $20 billion in 2007 and that Red Hat has about 20 percent market share.

Red Hat, with $400 million in Linux revenue over that period, doesn’t have close to 20 percent of the total industry revenue, but Whitehurst said the company is still “more profitable than our competitors charging significantly more.”

And while most everyone’s feeling pain from the down economy, Whitehurst said there’s a clear silver lining for company’s like his.

“I’m sad to say this, but this kind of market is great for us and it’s really good for open source. CIOs around the world are having their budgets cut, ten, 15 and even 20 percent,” he said. “At the same time demands on what they need to do are going up. Companies are fundamentally saying, ‘I have to innovate, but I have this fixed budget.’

“Not only is open source cheaper, but in many cases it’s more scalable and has performance advantages over proprietary solutions.”

Whitehurst noted that ten year-old Red Hat first broke out as a big commercial enterprise supplier following the dotcom bust. “A down market forces companies to ask ‘What can I do differently,'” he said.

During a Q&A session, Whitehurst said his company is ready to continue competing and partnering with rival Oracle (NASDAQ: ORCL). As for Oracle’s proposed acquisition of Sun, (NASDAQ: JAVA) he said Red Hat had been very successful competing against Sun’s Solaris.

While Red Hat leverages innovation in the open source community, Whitehurst claimed Oracle is more about “buying into Larry’s vision” referring to Oracle CEO Larry Ellison.

Touching on other subjects, he said desktop Linux could be tremendously useful, but he wasn’t sure anyone could ever make money selling it.

“People are used to the blue screen of death,” he said, referring to the screen of a Microsoft Windows crash. “They won’t pay for mission-critical on the desktop.” He said Red Hat has an enterprise desktop version with specific security features that’s highly valued to a certain set of customers.

Red Hat does that?

Whitehurst started off his talk with a recounting of how pervasive Red Hat’s software is by noting all the companies he interacted with on his trip to San Francisco.

First he said he got a great deal on Virgin America and used the entertainment system on the flight (both powered by Red Hat Linux) and rented a movie, Madagascar 2, rendered with the help of Red Hat Linux.

Then he gassed up his car at a BP gas station, checked the online version of the Chicago Tribune and made a few stock trades via Morgan Stanley and checked the New York Stock Exchange — all of which, you guessed it, are Red Hat customers.

Article courtesy of

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