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Red Hat at 30: Biggest Linux company of them all still pushing to become cloud power

Middle aged spread begins as it joins IBM

Opinion When you turn 30, you're not a kid anymore. For some of us, 30 is a traumatic birthday. For Red Hat, which turned on March 27, it was a cause for celebration. From a business that got started in one of its co-founder's wife's sewing room, it became the first billion-dollar pure-play open-source company and then the engine driving IBM. 

It has been a long strange trip. 

Sure, today, the tech world is dominated by Linux and open source software, but in 1993,  Linux was merely an obscure operating system known only to enthusiasts. Red Hat played a significant role in transforming the "just a hobby" operating system into today's major IT powerhouse.

Red Hat co-founder Bob Young, who previously ran a rental typewriter business, was one of those who became intrigued by Linux. In 1993, he established ACC Corporation, a catalog company that distributed Slackware Linux CDs and open-source software.

As Young later recalled, everyone knew that Solaris outperformed Linux, but it was only through Linux that users could customize the operating system to suit their needs. Young recognized that while he couldn't market Linux as superior, faster, or more feature-rich than Unix at that time, he could sell the advantage of user customization. This remains a key selling point to this day.

Young teamed up with Linux developer Marc Ewing, and they launched Red Hat Linux from his wife's sewing closet. Initially, Red Hat sold diskettes, servers, services, and CDs, like other early Linux businesses.

When I interviewed Red Hat's co-founder in 2014, Young told me, "It took many great contributors from the free software/open-source communities, including Stallman and Torvalds, as well as our teammates, Matthew Szulik, and now Jim and his vast team. None of us could have fundamentally changed the way software is developed and deployed without all the others."

Young added that his son-in-law, an internet software developer, and his colleagues rely heavily on the free and open software that Red Hat contributes to and benefits from. He also expressed gratitude to his family, particularly his wife Nancy, for supporting his endeavors in building a software business on a never-before-seen model. 

Even then, however, Young didn't really "get" Linux. It was only after he visited NASA's Goddard Space Flight Center, and Don Becker invited him to see a neat project he was working on that he got it. Becker's project was, of course, Beowulf, the first Linux supercomputer.

However, Red Hat first needed to find a winning formula, which allowed it to succeed where its now largely forgotten contemporaries such as Caldera, TurboLinux, and Mandrake faltered.

As former Red Hat CEO Jim Whitehurst told me in an interview, "The real contribution we've made, besides open-source software, has been the enterprise business model. It's obvious now, but it wasn't obvious at the time."

In 2003, Paul Cormier, then Red Hat's vice president of engineering and now the company's chairman, spearheaded the shift from the inexpensive prosumer Red Hat Linux distribution to the full business-oriented Red Hat Enterprise Linux (RHEL).

At the time, many Linux users hated the idea. Even inside Red Hat, Cormier said that many engineers were initially opposed to the new business model, causing some to leave the company while others stayed. The change also upset many users who felt Red Hat was abandoning its original customers. However, enterprise clients had a different perspective.

Whitehurst, who became Red Hat CEO in 2008, said, "Once RHEL was in the market, we had to fully support it to make it truly consumable for the enterprise." They succeeded, and Red Hat continued to grow. This is the model that turned Red Hat into the first billion-dollar-a-quarter pure open-source company.

Impressive for a business built around an operating system once considered suitable only for the "lunatic fringe." Then, in 2018, IBM acquired Red Hat for a cool $34 billion. There was nothing crazy about that move.

While some feared that IBM would gobble up Red Hat and then ruin it, Cormier, then Red Hat's president of products and technologies, promised the acquisition wouldn't interfere with Red Hat's day-to-day activities. "The day after we close, there will be nothing different. It will be business as usual with the same roadmaps. We'll continue to do what's right for the community," he said. "There will be no changes. I don't know how else to say that. There will be absolutely no change in how we work with the upstream Linux community."

While there has been one significant change – the RHEL clone CentOS changed its focus from being a business distribution for people who didn't need commercial support to a development preview – Cormier was largely correct. Red Hat remains, well, Red Hat, rather than just another IBM division.  

Of course, it hasn't been all smooth sailing. For example, when Red Hat acquired JBoss, the open source Java Platform Enterprise Edition application server, in 2006 for  $420 million, it was seen as a huge deal. Today, most of you are going, "Jwhat?" The product still exists under the name Wildfly, but with only a minute share, 0.2 percent, of the application server market. 

Another acquisition that looked bigger than it turned out to be was Red Hat's CoreOS acquisition. The theory was CoreOS's Container Linux would transform into Red Hat's immutable, container-centric operating system. It didn't work out that way. Today, CoreOS survives as Red Hat Enterprise Linux CoreOS (RHCOS).  There it's a component of OpenShift Container Platform 4.8 for all OpenShift Container Platform machines. That's important, but it's not as important as everyone had hoped at the time.

Another change that was already present in Red Hat, a shift towards supporting the cloud, has accelerated. Today, while RHEL remains the heart of the business, the Linux-powered cloud has become increasingly important. In particular, Red Hat OpenShift, its  Kubernetes-powered hybrid cloud application platform, is more important than ever.

Where does Red Hat go from here? When I last talked to Cormier and Red Hat's latest CEO, Matt Hicks, they told me that they'd keep moving forward with the hybrid cloud. After all, as Cormier pointed out, "the cloud wouldn't be here" without Linux and open source. As for Red Hat's relationship with IBM, Cormier said, "The red lines were red, and the blue lines were blue, and that will stay the same."®

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