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Red Hat CEO On Recession, Virtualization, Ballmer

Jan 08, 2010, 16:03 (0 Talkback[s])
(Other stories by Charles Babcock)

"Jim Whitehurst, CEO of Red Hat, says the deep recession "has been a perfect storm in a positive way" for his company, bringing more customers seeking lower infrastructure costs. Best of all, Red Hat's formerly sputtering JBoss unit's revenues are now growing faster than the company as a whole.

""With our recurring revenue model (annual subscriptions), we're not trying to fill the well up every quarter," Whitehurst noted in a breakfast meeting Wednesday in Palo Alto, Calif. As Whitehurst starts his third year as CEO, Red Hat reports that $164.4 million of its $193.3 million in revenue last quarter was from subscriptions, with some of Red Hat's top Advanced Server customers renewing their subscriptions for amounts of 127% of their previous contracts.

"Whitehurst said many Linux conversions have been from Unix in the past, but during the recession, "more and more conversions [come] from Windows users." Red Hat Enterprise Linux now runs on 15% of the servers in the data center, he said. (Microsoft sees Windows Server on 70% of new servers in the data center.) Customers are coming to Linux "we say because of its high value. But it is open source and lower cost," which has a distinct appeal in hard times, he noted."

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