Red Hat, which sells subscriptions to an open source server operating system based on Linux, posted positive results for the financial quarter ending 31 August 2009, with software subscription revenue up 15 per cent year on year to $156.3m (£94.4m), and net income totalling $28.9m (£17.5m) compared with $21.1m (£12.8m) in the same period last year.
Werner Knoblich, vice president and general manager of the company's Europe, Middle East and Africa region, tells Computing about successful open source subscription models, ongoing battles with proprietary vendors for a level playing field, and opportunities for open source software in cloud computing.
Computing: How has Red Hat managed to make money out of open source
software when other companies have failed?
Werner Knoblich: I don't think there is any secret ingredient; Red Hat was created as an open source company and it has remained true to this model. It re-invented itself as a 100 per cent enterprise company in 2002 with the first version of Red Hat Enterprise Linux (RHEL) on a subscription model and it has not changed that [model] in seven years.
What's the advantage of a Red Hat open source subscription for the
They get certification that the software will work with hardware and software from other vendors, like IBM or HP for example, as well as support, legal protection, and an enterprise-ready development effort. We have solved all the problems associated with just using open source software – vendor lock-in, the absence of service level agreements and certification, no guaranteed maintenance etc.
Is it possible to get Red Hat software for free?
It is possible that somebody out there is using RHEL and not paying for it, but the software would not be compliant and they would be in breach of a legal agreement with us. The RHEL binaries are only available through Red Hat, and to customers who have a contract and have accepted our terms. There is always piracy, and clearly some customers out there are using versions more or less based on the same source code, which has been recompiled and the trade marks taken out, but it is not RHEL.
Doesn't that make Red Hat more like a proprietary software
You can get hold of the software, the sources are out there. We are just stating that customers can only get support and services if they have an agreement with Red Hat. Why should we take a support call from somebody who has not subscribed to our products, or issue certification or updates? Also, if a customer bought one subscription and used it on 1,000 machines, our business model would collapse.
How does the UK public sector fare in terms of open source software
There are some user cases, like the London Underground Oyster card system which is based on open source JBoss for example, but it is true that the UK public sector is behind other European countries in open source software adoption - proprietary software vendors have done a good lobbying job to make sure of that. There is a bit more activity now, and Red Hat has set up a vertical team to focus solely on central and local government and nothing else. We are also working with systems integrators like SIS, CDC and Accenture, who are prime government contractors.
Red Hat and 17 other IT vendors have filed a lawsuit against a Swiss
government agency for awarding a contract to Microsoft without any public
bidding, how is that going?
That case is still pending and I am not allowed to comment on progress. What happened was that we said it is just not right that 14m Swiss francs (£8.4m) were awarded to Microsoft without anyone asking if there was an open source alternative out there. We are trying to find a settlement so that this will not happen again, and ensure a level playing field for everybody including opportunities for both closed and open source products. We know we have to take a stand where we feel we have a case, and are now working with the government through policies and so on to be treated equally. Though we know this is not legally enforceable, governments cannot do a 180 degree turn on what was publicly stated.
Are proprietary software vendors edging open source out of cloud
computing as well?
I don't agree that cloud computing is based on proprietary solutions – 90 per cent of all the clouds out there are based on open source technology, like Amazon's elastic compute (EC2) infrastructure, which is based on RHEL, for example. Open source can provide all the components for the cloud, like virtualisation, grid computing platforms and management tools. The trick is to tailor open source offerings for cloud providers.
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