Red Hat continues to impress with strong financial performance, delivering an impressive Q1 2009. Not bad when you consider the company gives away its products for free.
Red Hat pulled in $156.6 million in its Q1 (fiscal year 2009), a 32 percent increase over Q1 2008 and 11 percent growth over Q4 2008. Red Hat's operating income was also up 33 percent over the same quarter in 2008. But it's perhaps the deferred revenue (i.e., subscriptions and other services booked but not yet recognizable as revenue because they have yet to be delivered) that is most impressive: Up 36 percent to $491.8 million.
Clearly, Red Hat is doing something right. Many things right, in fact.
I asked the company specifically about JBoss performance, as rumors have swirled that JBoss has lagged under Red Hat's guidance. Quite the opposite. While there were initial hiccups in bringing the JBoss brand under the Red Hat umbrella, the unit is firing on all cylinders now, contributing a healthy amount to the Red Hat top and bottom lines. Red Hat wouldn't give specific numbers, but I heard the JBoss confidence from a range of different sources within Red Hat.
What about the cost side of the equation? Here there is perhaps even more cause for optimism, but also a creeping concern.
... Read moreFollowing on its successful launch of Red Hat Enterprise Linux as an Amazon Elastic Compute Cloud service, Red Hat is now offering the JBoss Application Server on EC2.
It's yet another example of open source truly becoming a Web-enabled service, rather than a mass of packaged bits and bytes. And it comes at a reasonable price:
Red Hat is charging a fixed subscription rate of $119 per month for JBoss Enterprise Application Platform, or a variable fee, starting at $1.21 per instance, per hour, with fees depending on the size, bandwidth, and storage of the services purchased...Customers can either license JBoss on EC2 from Amazon and receive a virtual image of the software, or make their own subscription of JBoss available on Amazon's compute cloud.
The more Red Hat and others can deliver their software as Web services, the less trouble there will be with getting a fair return on R&D investment in commercial open source. It makes a development service into a Web service, which looks an awful lot like a product that people are used to buying. Maybe an answer to Savio's fair critique?
Well, that didn't take long. First it was Barry Klawans taking an "extended break" (which lasted approximately 3 minutes ;-), and now it's Shaun Connolly of JBoss fame getting back into the ring with Bob Bickel and friends at Ringside Networks, the open-source social networking platform.
This isn't surprising, as Shaun worked with the Ringside team at Bluestone and again at JBoss. It was bound to happen....
Much is rightly made about the quality of open-source software like JBoss and Red Hat Enterprise Linux. These, however, are arguably not the source of the quality of the businesses behind them. Their networks were/are.
JBoss was doing well before it created the JBoss Operational Network using Hyperic's software as a foundation. But it was the Network that dramatically boosted JBoss' renewal rate and ASPs (as JBoss lead investor David Skok noted in his OSBC 2007 presentation). Red Hat was Red Hat before it had Red Hat Network (RHN), but RHN gave customers an easy justification for paying for what they could get for free elsewhere.
The Network, in other words, is the not-so-secret sauce that makes great open-source companies. The principle behind it is to give the "core" software away to lower the cost of sales and marketing, while providing "complementary" services like an RHN to facilitate a purchase.
Which brings me to Mozilla.
... Read moreI saw that Jim Whitehurst, Red Hat's new CEO, is gunning for $1 billion in revenue within the next three years. Given that Red Hat did $400 million in 2007, up from $278 million in 2006, this is perhaps not all that surprising of a goal.
What is more interesting is that Red Hat expects to get there by growing JBoss at twice the rate of its Red Hat Enterprise Linux, or RHEL, operating system. I believe that JBoss was on target to hit (roughly) $60 million in 2006. It may have fallen short of that, but let's assume that it managed to hit $75 million to $90 million in fiscal year 2007.
With Red Hat sales (not revenue) growing 41 percent over the past five years, let's also assume that Red Hat's growth target for JBoss is 80 percent to 100 percent each year (though, as I note below, it could be much lower).
... Read moreWhen I first heard that Bob Bickel was considering jumping back into the technology fray, I was deeply intrigued. Here's a guy who made a lot of cash with JBoss and promptly let absolutely none of it go to his head. Instead it went to his feet.
But then I talked with Bob and was even more excited to see what, exactly, he was up to, and with whom: David Skok of Matrix Partners, Rich Friedman, Jason Kinner, Rich Frisbie, and Mark Lugert of JBoss and/or Bluestone.
As for the what, think social networking meets open source. It all started with Bob trying to build "social" into a running store Web site, as Bob explains:
... Read moreJames Governor has a thoughtful response to my earlier post on Red Hat's JBoss business. James refuses to be drawn on the easier criticisms of my post, arguing instead:
It's no surprise to see JBoss being marked down by investment analysts. But if it starts to lose more committers it may have a real problem on its hands. Arguably the new business model has significantly evolved from the Fleury Era cult of personality, but in the open source world it is still a massive boon to have core developers on staff. I am not saying JBoss is dead or anything silly like that--but the situation is certainly interesting.
Indeed. It's one thing to lose a sales team. It's quite another--and much more dire--to lose one's development team, and especially in an open-source company. This isn't to say, for example, that JBoss' sales team isn't worth keeping around: if you're an open-source vendor you know how hard it can be to find salespeople that truly grok open source and sell accordingly.
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I heard through the grapevine this morning that Rob Bearden, one of the core JBoss executives and the man responsible for driving JBoss' impressive operations, is leaving OpenSpan. I assumed Rob was leaving to relax and to spend some of his hard-earned JBoss dollars.
Nope.
I called Rob to confirm the rumor and to ask what he's planning to do, and found out that he's looking for his next open-source play (probably starting his own thing). VCs, time to get on the plane and visit Atlanta, where Rob currently resides. He'll be staying with OpenSpan long enough to finish up some critical projects and then leaving by the end of the year.
In the meantime, he's willing to consult for other open-source companies to advise them on how to tune their operations. I've talked with him a few times over the past few weeks on this very topic, and believe that Rob is one of the sharpest tools in the open-source shed, as it were. Anyone fortunate to retain his services will score a major coup.
You'd think that Red Hat had "transformation" down pat. But the company apparently feels it has room to improve, announcing the appointment of Nick Van Wyk as vice president, global operations and senior transformation executive last week. Nick essentially replaces Joanne Rohde as EVP of global operations. Joanne resigned last week.
I really like and respect Joanne and am sad to see her go. Apparently, Red Hat felt the need to shake things up a bit. Van Wyk's role intrigues me:
... Read moreI normally wouldn't cover a Red Hat customer acquisition--after all, the company earns more than 10,000 new customers every quarter. It's just not news when it adds a new one, even a big one like Swisscom IT Services, as announced today.
But the Swisscom deal is significant, and not because of Linux. In fact, Swisscom IT Services already had a comprehensive Linux solution in place. Indeed, buying Linux is now such a no-brainer decision that reporting on Linux adoption is like reporting on someone buying furniture. You might decide to change the store from which you buy it, but you're not going to stop buying it. Everyone needs furniture.
No, the Swisscom decision points to Red Hat's success in selling operating system-to-middleware ecosystem value, and that, I believe, is very significant.
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