The man who wears the Red Hat

Many have tried, tested and fumbled. But not everyone has been as lucky in cracking a successful business model around open source. What's the trick? Is it the services and support periphery around the free core that makes revenues possible?

Not exactly. Open source is a concept that is around for the last 15 years but it is still relatively new. We are the only profitable and public company. Why is not everyone able to make money out of something, which is as successful inherently as a technology? The economics of abundance is in context to the power of open source. And then there are two words called innovation and collaboration.

Yesterday the copyright mode was operating and so people could ask for payments on open source. But that fundamentally undermined the power of open source. Now when you make it free, there is another problem. How to make money? A lot of people started with the support model you are hinting at. What Red Hat did was fundamentally different to the business model. It's not about trying to monetize the bits or the services. Everybody can do that. The key insight is that the development model of open source is around iteration.

Now if NYSE, for instance, has mission critical software running on OS, the last thing they want is an iterative change impact. Here, we come in and make sure that OS is consumable by the enterprise, and is fully QA-strong, fully tested, performance-tuned, certified, equipped with documentation, SLAs, localization aspects, iterative change development, everything. We are the people who do that and ensure stable tested bits on mission-critical deployments. Besides we commit to support it for seven years. It's not just the support but we make it bulletproof.

Would this be as sustainable or profitable as the traditional models?

If we talk of subscriptions, we have fundamentally changed the flawed software business model. A business model needs some results. Look at the artificial upgrade cycles in erstwhile software. About 80 per cent of features might not be used by the customer. Why develop new features that they don't and won't use? Vista is the best example; there is no real articulate functionality. But upgrades are seen to drive revenues.

We don't add features that the customers don't want. So they continue to pay us. Yet, we are the largest contributors to Linux. We listen; we pay heed to their needs, their complaints and add accordingly. Clearly OS is a very powerful development model. We put value to it. It is not just about support. Open source, in short, is a development model and not an implementation model. It has to be deployed as a solution. We play a role in making it consumable for the enterprise.

Your opinion on the recent brouhaha with the ODF Vs OOXML developments on open standards?

We are obviously disappointed. It only shows that MS holds a lot of commercial power in these areas too. In the long run, however, the publicity that this new development has generated will hopefully help in the debate's cause. More countries will use ODF and have OS tenders accordingly. More government lobby efforts are being seen. This has only raised the awareness in general.

So profitable open source is no longer an oxymoron?

No. The development model is open. It's all about how much can you match the pace of iterative integration and make it consumable for the enterprise. Enterprise-class software is not about functionality alone but about change in tandem in a production environment. It's very hard to dynamically change specs, maintain hardware piles, software piles, compatibility and certifications. If you talk of us, we have monetized not on the OS but on the value it has.

A lot of matrimony has been witnessed in the recent past on the aisle of open source. How do you interpret the consolidation action around with deals like MS-Novell, Sun-My SQL, Yahoo-Zimbra?

I won't pooh pooh anything. That said, not many realize the real essence. The power of OS is in maximizing community and collaboration. Sun controls the major part of development realm. I don't know, in that light, how exactly they make the model work. We are hundred per cent OS that leads to greater strategic clarity.

The idea of economics of abundance again comes to discussion here. We don't control Linux. But getting the constant changes that happen on the development front, as upstream as possible is the real thing. There was once a need for a real-time kernel by banks and financial services customers. Novell already had it but they never got it upstream, so when we did that upstream, they had to abandon theirs. The whole Linux later moved in that direction.

What's your take on the strides that Google is apparently making in the open territory with ideas like Chrome and Android?

I applaud what they do. They invent and fund a lot of work around OS, in getting the code out there and on GPL. There is a lot of debate around GPL 2 and 3. Google is a potential breed of strong talent. It's no doubt a massive company with apt human resources. I also understand the genuine concern around SaaS vis-à-vis the software industry.

What are this year's strategic highlights on Red Hat's stack?

The OS infrastructure for enterprise is not just about Linux, it's about management tools, security, virtualization. So this year, we would be announcing more products. Areas like security components, grid functionality, high-speed messaging, functionality on new architecture etc would be exciting. Virtualization has got hijacked in server consolidation. We would be bettering it out with competition. There is huge opportunity for us. Application mobility is important. We would be racing hard in areas like virtualization besides ancillary grid management tools, and would be fully leveraging clouds both internally as well as externally.

What do you make of the OS inclination of Indian E-governance projects?

The striking part is the relative size of the projects and clear commitment to open source. Europe too has been pushing towards open source. In India we see deeper level of knowledge transfer and government has been far-sighted, as it pushes for great adoption and progress. That's impressive.

And your takeaway from India with this trip?

India has a lot of opportunities to leapfrog on the development track as well as in implementation of OS on a broader scale. India ranks as the second largest community in terms of the Linux kernel code contribution. The size of projects, integration, development and scale of development is notable and unique in India. India is also an important market from a scale perspective.

My impression of India is that it is extraordinary both in terms of size and the pace of growth. Also from an IT perspective if you look at the US, they are generally upgrading existing pieces but in India we can see many Greenfield projects and initiatives-from-scratch. That's extraordinary. It has one of the largest numbers of certified engineers, which is more than the US. It is a very skilled market.

India's massive advantage on System integration is great, which will be very important in light of the general movement worldwide around open source. About seventy per cent of applications will have open source.