Jim Whitehurst, Red Hat | Red Hat Summit 2019
Channel: SiliconANGLE theCUBE
Date: 08/05/2019

Jim Whitehurst, President & CEO, Red Hat talk with John Walls and Stu Miniman at Red Hat Summit 2019 in Boston, MA.

#RHSummit #RedHat #theCUBE

https://siliconangle.com/2019/05/13/smoking-good-deal-10-trillion-impact-red-hat-34-billion-bargain-rhsummit-guestoftheweek/

A ‘smoking good’ deal? Red Hat could prove a $34 billion bargain for IBM

When does free technology become worth $10 trillion? When the company is Red Hat Inc. and its open-source software and applications running on Red Hat Enterprise Linux contribute to $10 trillion worth of global business revenues this year.

That’s the conclusion from an International Data Corp. study released during the company’s major annual gathering in Boston last week. IDC found that RHEL, as the world’s leading enterprise Linux platform, would provide its users with economic benefits of $1 trillion each year through 2023, and that information technology organizations using the platform would save $6.7 billion in 2019 alone.

To put $10 trillion in perspective, that’s 10 times what it would cost to buy everyone in the city of San Francisco a very nice apartment, or 10 times the value of Apple Inc. It’s a lot of money, especially when one takes into account that Red Hat and Linux were created out of the open-source movement, fueled by a community of programmers building new software tools that are given away for free.

Red Hat stands as an open-source success story, validated when IBM Corp. announced last October plans to acquire the firm for $34 billion. And, when asked if IBM’s decision will prove a good deal for everyone involved, Red Hat’s chief executive officer had no doubts.

“Red Hat is not only a fast-growing company, we’re also a really profitable company,” said Red Hat CEO Jim Whitehurst (pictured). “Because we get the leverage of open source, we actually generate a very large amount of free cash flow. If you look at our free cash flow generation and our growth, I would argue it was a smoking good deal at $34 billion. I was asking for a lot more than that.”

Whitehurst spoke with Stu Miniman and John Walls, co-hosts of theCUBE, SiliconANGLE Media’s mobile livestreaming studio, during Red Hat Summit in Boston. They discussed Red Hat’s business model, managing the cultural contrast with IBM, a new partnership with Microsoft Corp., and guiding principles of leadership (see the full interview with transcript here). (* Disclosure below.)

This week, theCUBE features Jim Whitehurst as its Guest of the Week.

A non-traditional model
By selling support for open-source technologies such as Linux, Red Hat attached itself to a massive ecosystem. Linux runs nearly 70% of web servers today. It is also the operating system for Android, which powers 86% of smartphones across the globe.

Yet, Red Hat has not followed a traditional model in becoming one of the world’s largest software companies. Instead of writing its own software, Red Hat relies heavily on open-source communities, preferring to work upstream to generate its enterprise products.

“We’re 10-20% of the contribution because we want to rely on communities,” Whitehurst said. “Other open-source companies, and I think this is more of a challenge with the hyperscalers, write more of the software themselves. Obviously, they need to monetize that in a more direct way.”

Reliance on the open-source community involves adhering to an ethos built around collaboration and sharing. It is this cultural commonality that has defined Red Hat, and it is the same issue that makes the company’s newfound partnerships with IBM and Microsoft Corp., two longtime bastions of proprietary technology, even more jarring.

Although IBM and Red Hat first signed an agreement to work together back in 1998, collaboration between the two companies on hybrid cloud platforms since 2016 appeared to set the stage for the acquisition announced in October. One year ago, IBM partnered with Red Hat to extend its Cloud Private technologies to the OpenShift container platform.

“That’s when the technical light went off that having the same bits running across multiple clouds is really valuable, and OpenShift is the only way to do that,” Whitehurst stated.

Clash of cultures
Two decades of partnering on technology initiatives formed a relationship between the two companies, but there was still that pesky “cultural thing.” Collaboration in the business world sounds like a friendly exercise, but when opinionated open-source developers get together to hash out an important project, the process can feel more like an intense boxing match.

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Here’s the complete video interview below, part of SiliconANGLE’s and theCUBE’s coverage of Red Hat Summit 2019. (* Disclosure: TheCUBE is a paid media partner for Red Hat Summit. Neither Red Hat Inc., the sponsor for theCUBE’s event coverage, nor other sponsors have editorial control over content on theCUBE or SiliconANGLE.)