Red Hat boss sets sights on $5B

Red Hat CEO Jim Whitehurst

Red Hat CEO Jim Whitehurst

NEW ORLEANS — There are very few enterprise software players who’ve made the $5 billion (U.S.) per year in revenues mark, and the names are no surprise — Microsoft, VMware, Oracle, SAP, and Salesforce. But Red Hat CEO Jim Whitehurst says his company has a chance to join the rarified air of that group, and at his company’s annual North American Partner Conference here this week, he laid out his plans to get there over the next five years.

Of that $5 billion in revenues, Whitehurst told he sees about 80 per cent, or $4 billion, coming from the company’s channel partners. Today, that channel revenue figure sits at about $1.4 billion.

“We’re talking about almost tripling that revenue,” Whitehurst said. “There’s enough demand out there now. Now it’s about getting the right solutions in front of the right customers. These aren’t aspirations. This is a five-year-plan with a lot behind it, and these are opportunities that are there for us to attack.”

The biggest shift in Red Hat’s favour is a move towards open source in general in the enterprise market, and Whitehust sees his company’s long-held open source strategy of identifying up-and-coming open source community projects, fostering and supporting them, and eventually productizing them as a real differentiator. Today, he said, “we’re moving towards a world where the innovation comes from the users” in the form of various open source projects that spring up organically, and a few of which ultimately come to market. That’s been Red Hat’s strategy for development for a long time, so it’s well-equipped to take advantage.

“The first decade after we launched [Red Hat Enterprise Linux] in 2002 was about defining open source as a viable alternative. We’ve done that. That’s done,” Whitehurst said. “In the next era of cloud and mobile, open source is the default choice. Now, it’s a matter of taking this to find a way to make it truly value-added to our customers.”

So while Red Hat is calling on its partners to raise the volume as the company grows, Whitehurst said he’d also like to see a shift in how partners invest with the company. RHEL continues to be important as a volume product, but with open source becoming more standard across more of the enterprise stack, he’s now raising the volume on the pitch for partners to sell more broadly across the company’s ever-increasing portfolio of products stemming from the open-source community. That’s a shift that’s starting to happen in the partner base already, Whitehurst said. It’s most commonly reflected in larger partners. The company has typically had its greatest depth with “boutique” or specialist partners who went deep with the company. Where it’s had success with bigger partners, it has largely been with volume sales of RHEL, he said. But that’s changing.

“We’ve had much bigger partners coming and wanting to building with us. It’s nice to have some of those larger scale partners coming to us, instead of us having to go to them,” Whitehurst said.

That said, Whitehurst is calling upon partners — large and small — to both think about the company’s full product lineup and their own strategy as it regards open source as a whole.

“Take that lens, look at what OpenStack is doing, where containers are going, and invest now,” he suggested to partners. “It’s a different world when you’re looking at the market today — worklaods today look vastly different than they did ten years ago. How do you build around OpenStack, around container management. That’s not a big market today, but that’s where the world is going to, and you need to build those capabilities now.”