Red Hat's new chief executive, Jim Whitehurst, has his eyes on the sky.
The former Delta Air Lines chief operating officer, who took over the reins of the open-source software company from Matthew Szulik in January, sees cloud computing as a top priority.
The term 'cloud computing' refers to computing services available to anyone online, rather than custom datacentres isolated within corporate confines, but it also dovetails with the general idea of computing services running at massive scale on a more flexible infrastructure.
"The clouds will all run Linux," Whitehurst said.
Being Red Hat's chief executive is always a balancing act. On the one hand, there's the sometimes fervid open-source software community — the volunteers and professionals who collectively produce the software that Red Hat packages, tests, tunes, sells and supports. On the other hand are the much more pragmatic customers who just want their technology to work. Red Hat must be friends to both camps: neither a parasite sponging off the hard work of others, nor a useless middleman selling what can be downloaded for free.
In an interview before the LinuxWorld Conference & Expo, which begins 7 August, Whitehurst, who has long used Linux himself, discussed business at Red Hat.
Q: What's your biggest surprise since starting at Red Hat?
A: I think I finally get the joke. I was a senior exec and, like every other senior exec, I had a huge IT budget. Mine was as large as Red Hat's revenues last year. You sit there and say: "Why are my IT costs going up, but I'm getting less and less functionality?"
Every IT professional says the same thing: "My lights-on costs are going up. But — wait a minute — I bought a laptop, and it cost me half as much as it did three years ago, and my costs are going up?" I get the joke now.
If you look at the S&P 500, seven of the top 20 companies are tech and, other than Google, they're not high-growth. But they're just printing money because switching costs are so high. There's this incredible amount of residual goodwill to Red Hat because we're seen as an alternative to that. Oracle announced a 20-something percent price increase just as the economy starts heading south. How can you do that unless you're pretty sure nobody can switch? High switching costs led to infrastructure cost creep. Once you get hooked, you can't get off.
I recognise Red Hat's a prominent alternative to incumbent players, but Red Hat's been around for a while now, and it's not easy to get off Red Hat. It might be easier to get off Red Hat Enterprise Linux [RHEL] than, say, AIX from IBM, but...
It's very simple. You can stop paying us.
But the switching cost is still there.
You can stop paying us and keep using the same bits [the software]. That's the point. The bits are free. You no longer get the support, but you can get support elsewhere. If you don't think we're adding value that year, you can stop paying us and keep the bits, so we've got to add value with service and support.
What if you want to switch to Novell's Suse Linux Enterprise?
You'd have to ask different customers. A lot threaten us in contract negotiations over price. We, luckily, don't lose a lot that way. If you look at IDC numbers, there's about as much unpaid Red Hat as there is paid Red Hat out there, if you look at unpaid RHEL, CentOS and Fedora. Clearly people value the functionality, but a lot of people don't pay us for it.
What about all these high-growth companies with humungous scale-out infrastructure, like Google or Amazon? Does it concern you that these companies are able to use Linux for free?
Amazon is very much a paying customer. Google is the very rare exception. As a company gets more sophisticated, one can argue the value of the support is less; but, as companies get more sophisticated, the importance of the thing we provide goes up. So, for instance, if Amazon wants to get something upstream into the [Linux] kernel because they need some functionality for EC2 [the Elastic Compute Cloud web service], who can get it upstream? We can.
Today, we have Uli Drepper [a Red Hat developer] meeting with a bunch of major customers, and have invited Intel to talk about power management in chips, to talk about the next generation and what they need and what we need, and feedback to Intel. If you're not a Red Hat customer…
