If Microsoft wants to open up, I will celebrate

From its earlier days as a small private software company, Red Hat has

traversed the distance to become a globally recognized brand. And to take the

growth story forward, Jim Whitehurst has been appointed as the new president and

chief executive officer. Whitehurst, who comes from a non-IT background, in his

previous role has worked as the COO of Delta Airlines. The responsibility on

Whitehurst will be huge considering that he takes over in his new role in

turbulent times when the so-called strong economies are falling apart. In

times like these Whitehurst will be responsible to build the open source

software as an innovative and profitable business model. In his first trip to

India, Whitehurst, in an exclusive interview with Dataquest, shares his future

vision, significance of the Indian market, up and fields questions on

competition with Microsoft. Excerpts

In your last role at Delta Airlines, you managed to turn the company

around, especially at a time when the aviation industry across the world is

undergoing turmoil. What will be your business model for Red Hat?



At Red Hat, obviously its a very different situation from what we faced in

Delta. Here we are sitting atop a massive opportunity. However, we are still a

relatively small company when compared to the other IT companies, and so my

immediate objective is to make sure that we achieve our full potential of making

optimum use of this opportunity. Our business model is not about trying to

monetize the bits or the services, which incidentally anyone can do. The

differentiator here is that the development model of open source is around

iteration. For instance, if NYSE has its mission-critical software running on

OS, the last thing they would want is an iterative change impact. It is here

where we come in and make sure that OS is consumable by the enterprise, and is

tested, performance-tuned, certified, equipped with documentation, SLAs,

localization aspects, iterative change development everything. We are the

people who do that and ensure stable tested bits on mission-critical

deployments.

Most companies using a typical licence model lock-in their customers who

cannot get out of it. So if you go to any company at the time of license

renewal, they will come back and say we want 80% of the profits of your company.

Realistically, in the end one would probably have to get it done but I

believe that lock-in leads to increasing costs since proprietary companies use

it to get you to spend more on IT. So eighteen months ago, we released Red Hat

Enterprise Linux 5.0, new functionality with free virtualization built which

does not cost you a penny, and as a subscriber you can download any

functionality.

Does this fundamental change in business model lead to a dynamic shift in

how Red Hat is percieved among competitors?



We have fundamentally turned the model on its head but our biggest

competitor is complacency. People might say that Microsoft is the biggest

competitor, but I believe that people not paying us is our biggest competitor.

So we have to earn on our customers business everyday but on top of that we

have no incentive to arbitrarily make up a bunch of updates to come out with

version 6.0 just to get people to buy one.

Even though open source as a concept has been around for the last fifteen

years, it is still considered to be relatively new. Red Hat is the only

profitable and public company. But what is surprising is why everyone is not

being able to make money out of something that is as successful inherently as a

technology? The economics of abundance is in context to the power of open

source. And then there are two words called innovation and collaboration. Until

yesterday the copyright mode was operational and, therefore, companies could ask

for payments on open source. However this has fundamentally undermined the power

of open source. But now there is another issue cropping up after making it free,

and that is, how to make money?



Even though we are the leaders of open source and the only profitable public

open source software company, we still have this massive opportunity in front of

us, and it is up to us to grab it. So, when I first joined the company, I would

always say why we are not a multi-billion dollar company. After spending eight

months here, I can see why we are not. But there is no reason why we will not be

since the opportunity is huge.

If your long-term agenda is to bring IT costs down for enterprises, what

else would be the key things that you would undertake to ensure that CIOs do not

complain of IT becoming the single biggest cost?



We continue to develop Linux and are the single largest commercial

contributors to Linux . But if you look at where we are aggressively moving in

line with the product announcements that we made while acquirity Qumranet; we

are actually working on the components of the architecture that keep you from

getting locked in. So the key, for instance, is two different components; first

is to build a set of open source manageability, security, and sets of

components, so that you are not locked into somebody elses management

framework. You have an open source alternative framework out there. So the open

source RHN, the Red Hat Network, which is our core management tool for Red Hat

servers, is now 100% open source. It can be more comprehensive and a faster

growing manageability platform. We also launched identity policy and audit (IPA)

which is a whole set of security tools.

The Qumranet acquisition is the acquisition of key virtualization set of

technologies. Its the virtualization built into the Linux kernel and virtual

desktop. And so by putting those pieces together, we are basically abstracting

computing cycles from how that is implemented and doing so freeze up

architecturally. By providing manageable solutions to infrastructure we are

moving beyond point here, point there and truly adding flexibility.

Can we deduce that low IT costs are not just an attractive proposition for

the developing economies but of late, some of the so-called developed

economies too are being drawn to it?



I cannot comment on thatwhether it is equal or morebut I need to make

clear that we offer lower cost but superior technology. So be it

mission-critical applications of a major bank like financial trading system, the

work probably runs on Red Hat Linux. Mind you, these institutions were not price

sensitive albeit they were looking for performance. And the reason they

approached Red Hat was because we offered better performance than Solaris, and

you wouldnt think about running a major trading platform on Windows because of

stability.

So those guys run Red Hat Linux because of performance. Therefore, its an

interesting dichotomy because certain users come to us because of better

performance and certain users come to us for lower costs. It is almost like we

kind of relatively offer diverse optionsbetter performance with scalability and

security but lower cost.

But certainly, the uptake in the developing world with open source is huge

and particularly of interest to governments. Promoting open standards and

accelerating true fundamental knowledge transfer is a good thing for the society

as knowledge transfer is the first step toward wealth transfer in the long run.

In my meetings with senior government officials, this is precisely why they

wanted to meet us. We do fundamental knowledge transfer since the code is open,

the code moves there. One of the key things we do is that we work in

communities, to build communities, and get people involved in IT at the real

theoretical levels.

About 70% of applications will have open source

Is Red Hat going to become another Microsoft?



I certainly dont think so. Our business model is vastly from Microsoft.

Open source is a developmental model, its the way software is developed and

this is the source of differentiation for us versus Microsoft. We are

evangelizing the Accentures and others of the world and convincing the players

in the market about the stability of these technologies and how open source is

better than proprietary competitors.

We spend a lot of money on certifying hardware platforms and software

platforms, ISVs on top. All thats a lot of work, we can leave that to our

customer. If the customers dont see the need for that, we write off our bill

system, which we dont have to do in open source. We go beyond the letter of the

law of open source. You can download the source and recompile it. But again

people dont see the value in the certifications, in the support models, in the

SLAs. The more people use it the better. Basically, we are trying to say that we

do not lock you in at all; the customer can stop paying us at any time since

its a business model built around the customer.

What is your take on Microsofts newfound interest in open source, since

we have already seen some radical changes at Microsoft in terms of opening?



Ill welcome Microsoft opening anything because opening is good for IT and

it leads to more innovation and efficiency. I have said in the past and am

saying this again, that we would love to work with them on interoperability but

it just cant be tied to any type of intellectual property deal with hamstrings.

We have been opening and we continue to be open. We are out there to offer open

standards, interoperability, and if Microsoft wants to open up I will celebrate.

If it helps make IT more open, if it helps faster collaboration, innovation and

it is great for our customers, its ultimately great for us. But again you have

to fundamentally turn economics on its ears.

Considering this is your first visit to India, can you elaborate on the

Indian agenda and the strategies earmarked for the Indian market?



India is an extraordinarily important IT market for us with a very

sophisticated user base, and is our third largest market in terms of

contribution to Fedora, which is our free OS. Its our cutting edge R&D in Linux

and is a great parameter to measure how we are building a community of users.

These communities are people not paid by us; these communities are learning

about Linux, participating in Linux and actually committing code including

Fedora projects.

In terms of coming down to more specificsgovernment, education, financial

services and telecom are the big verticals here. I am fascinated with India

because of its size and scale. If one looks at a typical government project

here, its passed tens of thousands of users, devices.

We actually have more Red Hat certified engineers in India than we do in the

United States. We work with university systems and work hard to spread knowledge

out there. This is important since several countries including India believe in

this if one wants to truly build an IT-based and more technical focused economy,

since India is paying large amounts to the developed world.

In India, there is a greater focus on knowledge transfer and a broader agenda

about learning open source. In the USA, its about the same thing, although its

a little bit more about true cutting edge, pushing the envelope technology,

specially giving it to military or security agencies

We also have one of our global support centers here in Pune, apart from

several other centers across the world in Europe, North America, Brisbane and

Beijing, since we follow the As the Sun rises model. In India we are meeting

business partners, systems integrators and distributors apart from spending a

lot of time with communities, since it is these communities that are the secret

of open source.

Indias massive advantage on system integration is great, which will be very

important in light of the general movement worldwide around open source. About

70% of applications will have open source.

Stuti Das



stutid@cybermedia.co.in