With all the talk about “cloud computing,” Open Stack, Platform as a Service and more, it’s easy to forget that Linux remains the core of Red Hat’s success, as another quarterly performance discussed on Wednesday clearly showed.
In the words of Jason Maynard of Wells Fargo Securities, Linux remains Red Hat’s “bread-and-butter.”
And there’s still plenty of “bread” to spread with Linux “butter,” says Red Hat’s top executive.
In a conference call with analysts, Red Hat (NYSE: RHT) CEO Jim Whitehurst said the company is only in the “third inning” of winning corporate clients away from Unix.
Plus, Whitehurst sees a lot of potential in winning over “all new workloads.”
Here’s how the discussion went in the conference call with the transcript provided by SeekingAlpha:
Jason Maynard – Wells Fargo Securities, LLC, Research Division:
“Jim, I have a question for you just around the core Linux business, and I’d love to get your take on where do you think we’re at in UNIX or Linux migration? How would you characterize the health, if you will, of sort of that bread-and-butter business? And how much, if at all, is that business, do you think, impacted by some of the challenges and [indiscernible] in the financial services and some of the other sectors of the economy?”
“Again, I think when we look out at opportunities, we do a bottom-up build. And so we look at our customers, we look at their Linux footprints relative to their UNIX footprints and how much room we have to go.
“And based on that metric, third inning maybe. I would say even our most penetrated customers, some of the big financial services institutions are maybe halfway done, 60% done with UNIX to Linux. Mainstream customers are nowhere near halfway done. So I’m guessing a little bit on the third inning.
“What’s interesting is what’s left, too, because it’s more likely to be at mainstream customers or it’s kind of bigger systems. The ASPs of what’s left are significantly higher than the ASPs of what we’ve already done because, one, I think mainstream versus early adopter customers, mainstream customers are more likely to buy higher service levels because they want kind of more support and more immediate support. And then obviously, just the bigger boxes, it’s just a higher price point.
“So in terms of units, I’d say again, third, maybe early fourth inning. In terms of dollars, it would be significantly earlier than that. Just one other comment, too. That is certainly a go-to-market motion, but when I really look at the volume growth, where, at least we see, just kind of talking to customers, we win a very high percentage of new workloads.
“I mean, big data workloads are almost exclusively on Linux, and then it’s only a matter of is it Red Hat or is it free? Most web workloads, the same way. So when we actually look at drivers of growth with our customers, certainly UNIX to Linux is one, but I would say a very high percentage of all new workloads end up on our platforms, certainly, relative to anyone else’s.”
[RED HAT ARCHIVE: Check out more than a decade of Red Hat stories as reported in WRAL Tech Wire.]