IT Manager's Journal: Red Hat CEO Szulik on Business, SCO, and Other Topics

"How would you characterize the long-term prospects for Red Hat's business model?

"Red Hat's move to the subscription model began in 1997. Management believed that if it could deliver innovation to the customer as fast as it could certify and test, then it could increasingly deliver value to the customer over the long term. This was one of the reasons for moving to the subscription model.

"The key to making the subscription model work was (and continues to be) the relationship between bookings and revenue recognition. It continues to be critically important for Red Hat to generate, on a quarter-to-quarter basis, somewhere more than 100 percent of the quarterly bookings target that show up in deferred revenues on the balance sheet..."

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