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

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

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

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

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