Red Hat: OpenStack big, getting bigger, OpenShift fatter than Linux

IBM does help, too

OpenStack drove a chunk of Red Hat’s largest deals during the fourth quarter, with cloud proving more lucrative than its trademark Linux business.

One-third of what Red Hat called its largest deals in the three months to February 28 contained an OpenStack private cloud component.

More than a third involved Red Hat’s Ansible automation management technology.

For the three months, Red Hat reported $65.8m net income, up 24 per cent, on total revenue of $629m, up 16 per cent. Earnings per diluted share were $0.36, up seven cents.

Red Hat claimed $253m net income, an increase of 27 per cent, on £2.4bn revenue for the year, an increase of 18 per cent with an EPS of $1.39.

Red Hat reckoned on four deals with a value of $20m in the quarter, 16 at $5m and 30 with a value of $3.5m for the period with telecoms, Red Hat’s busiest sector.

Chief executive Jim Whitehurst said OpenStack featured in three of Red Hat’s four big deals over $100m.

That $100m was for middleware – Jboss replacement for IBM’s WebSphere and a “reasonable amount” of RHEL.

OpenShift is sold by Red Hat on top of OpenStack, but "some" of the largest deals were just OpenStack, Whitehurst said.

During the quarter, Red Hat sidled up to Hewlett-Packard and Huawei to collaborate on its Linux and NFV – priming RHEL as a convergence platform.

The biggest boost arguably came through a expanded channel partnership with IBM to sell Red Hat’s OpenStack distro.

Non-history fans note it was IBM’s backing on its servers and via its global sales in the early days that helped propel Red Hat past the Linux competition to where it is.

No IBM, and, possibly, you wouldn’t be sat here today reading this.

Whitehurst reckoned growth is coming as the notion of either public cloud or private, using OpenStack, is falling away. He implied Red Hat is becoming synonymous with OpenStack – at least in the minds of Red Hat’s enterprise customers.

Cloud has more margin for Red Hat than its Linux, according to Whitehurst, who was pressed by Wall St types.

Cloud - OpenShift, at least - is priced at 20 times the cost of Red Hat Enterprise Linux on the same two-socket server, Whitehurst said.

Moreover, Whitehurst implied customers can’t detach from Red Hat on cloud by doing their own support – something they try on its trademark Linux.

“I think you will not have the same dynamics we have with RHEL, while RHEL is great. You do get customers who threaten the self-support, that's probably the primary kind of competitor for us on a renewal, where with something like OpenShift and OpenStack we get many more technologies. It's not just kind of 'one easy go' download sent off kind of thing,” he said here. ®

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