Up the revolution!

The rise of Red Hat

Bob Tarzey, Analyst and Director
Quocirca Comment October 2014


Up the revolution! The rise of Red Hat http://www.quocirca.com 2014 Quocirca Ltd

One of the IT industries quiet successes of the
last 20 years has been Red Hat (some stories say
it was named for the red caps favoured by 18th
and 19th century revolutionaries). In 2012
vendor reported revenues of $1B+ for the first
time and this has increased to $1.5B+ in its most
recent full financial year (ending Feb 2014).
26% of Red Hats revenue is generated in
Europe and more than 20% its 7,000 employees
are based in the EU, including those at its Bruno-
based development in the Czech Republic.

There are not many pure software infrastructure
vendors the size of Red Hat (perhaps the only
other is VMware, whose rise has been even more
dramatic). There is certainly no other dedicated
open source vendor anywhere near its size and
with its range of software infrastructure offerings
which include operating systems, middleware,
virtualisation, cloud management and storage.
Red Hat also provides related consultancy and
cloud services.

Red Hats flagship product is its operating
system RHEL (Red Hat Enterprise Linux). It is
the leading commercial Linux distribution by
some measure with, Red Hat claims, a 63%
market-share. The latest release, V7, includes
Linux Containers that enable multiple
applications to be supported in a single virtual
machine (VM). This has profound cost lowering
implications for those running Linux-based
workloads on commercial cloud platforms as
resources allocated to a given VM are only
allocated to individual applications when they
are needed. It also has improved Microsoft
Windows integration; indeed, you do not need to
be a RHEL user to be a Red Hat customer;
certain of its products run on Windows including
its JBoss application server.
Red Hats growth has been both organic and via
acquisitions, of which there have been 27 since
1999. These are mainly small technology
companies that enrich the Red Hat portfolio. The
highest profile, and the second most expensive at
$420M, was JBoss in 2006. Recent pure open
source acquisitions include Fusesource for
integration and messaging (2012) and Inktank
for Ceph object-based storage (2014). Another
2014 acquisition is eNovance, a French
consulting services company, focussed on
OpenStack, the increasingly popular open source
cloud platform.

The acquired vendors benefit themselves from
becoming part of the Red Hat stable. Indeed
some join Red Hat rather than being acquired,
for example CentOS (2014), a community-based
development based on RHEL. Red Hat picked
up the funding for this open source project and
employed the community leaders. If a company
Red Hat acquires is not open source, it soon
becomes so, as was the case with Polymita for
business process management in 2012.

Red Hat does not need to own a product to
provide a distribution of it. Linux is the obvious
example; another is OpenStack. Officially Red
Hat calls its distribution of the latter RHELOSP
(RHEL OpenStack Platform) but generally just
refers to it as OpenStack. According to 2014
Icehouse Analysis figures published by Bitergia,
Red Hat is the largest contributor to OpenStack
with twice as many commits (accepted
updates) as IBM, HP or Rackspace (the founder
of OpenStack). In 2012 Red Hat acquired
ManageIQ to enhance RHELOSP support,
providing orchestration of workloads across
multiple cloud and virtualisation environments.
This is another example of a Red Hat product



Up the revolution! The rise of Red Hat http://www.quocirca.com 2014 Quocirca Ltd

than runs on Windows from a non-open source
vendor that it has converted to open source. Red
Hat calls its own ManageIQ distribution
CloudForms.

Red Hat has also been building out its own cloud
services. These include an infrastructure-as-a-
service (IaaS) offering called RHCI (Red Hat
Cloud Infrastructure), which includes operating
system, virtualization and cloud management
and a platform-as-a-service (PaaS) offering
called OpenShift (based on its 2010 Makara
acquisition). Red Had offers its own instances of
OpenShift hosted on Amazons EC2 cloud
plartform, but it can be implemented on pretty
much any virtualized infrastructure; on-premise
or from some other choice of cloud service
provider.

OpenShift makes use of the containers
introduced in RHEL V7 which Red Hat says
reduces its own payments to Amazon by 75%. It
seems open source is saving Red Hat money, as
well, as it would claim, for its customers.

This article first appeared on The Stack:
http://thestack.com/up-the-revolution-the-rise-of-
red-hat






Up the revolution! The rise of Red Hat http://www.quocirca.com 2014 Quocirca Ltd



About Quocirca
Quocirca is a primary research and analysis company specialising in the business impact of information technology
and communications (ITC). With world-wide, native language reach, Quocirca provides in-depth insights into the
views of buyers and influencers in large, mid-sized and small organisations. Its analyst team is made up of real-
world practitioners with first-hand experience of ITC delivery who continuously research and track the industry
and its real usage in the markets.

Through researching perceptions, Quocirca uncovers the real hurdles to technology adoption the personal and
political aspects of an organisations environment and the pressures of the need for demonstrable business value in
any implementation. This capability to uncover and report back on the end-user perceptions in the market enables
Quocirca to advise on the realities of technology adoption, not the promises.

Quocirca research is always pragmatic, business orientated and conducted in the context of the bigger picture. ITC
has the ability to transform businesses and the processes that drive them, but often fails to do so. Quocircas
mission is to help organisations improve their success rate in process enablement through better levels of
understanding and the adoption of the correct technologies at the correct time.

Quocirca has a pro-active primary research programme, regularly surveying users, purchasers and resellers of ITC
products and services on emerging, evolving and maturing technologies. Over time, Quocirca has built a picture of
long term investment trends, providing invaluable information for the whole of the ITC community.

Quocirca works with global and local providers of ITC products and services to help them deliver on the promise
that ITC holds for business. Quocircas clients include Oracle, IBM, CA, O2, T-Mobile, HP, Xerox, Ricoh and
Symantec, along with other large and medium sized vendors, service providers and more specialist firms.

Full access to all of Quocircas public output (reports, articles, presentations, blogs
and videos) can be made at http://www.quocirca.com