Even Jim Whitehurst is surprised at how the world is embracing OpenStack from Red Hat.

“We’ll we’re seeing, actually – I kind of I’ll say surprisingly strong interest across the board,” the Red Hat CEO told an analyst Thursday evening.


When Whitehurst and Red Hat (NYSE: RHT) management decided over the past couple of years to take the Hatters well beyond Linux into “cloud computing” and to endorse OpenStack in that increasingly competitive environment, some people weren’t sure the idea was the best. After all, Red Hat Enterprise Linux was the company’s bread-and-butter. 

Red Hat made that decision two years ago last month, as WRALTechWire reported at the time.

But as Whitehurst and Chief Financial Officer Charlie Peters confirmed Thursday in Red Hat’s fiscal year ending earnings wrapup, OpenStack is paying off. (Red Hat reported revenues of $400 million and earnings of 39 cents per share, both topping Wall Street expectations. Leading the way: A record number of $1 million-plus deals. The Hatters beat revenue and earnings projections for the fourth consecutive quarter, says Investor’s Business Daily.)

Just call Red Hat the OpenStack AND Linux leader.

  • An analyst’s view: How Red Hat’s strategy is paying off.

Red Hat will forever be known as the company that commercialized the penguins of open source Linux.

That’s old news. Now the Hatters are quickly becoming a [THE?] big driver in OpenStack – or open source based – for cloud computing. POCs – proofs of concepts – are flowing in. Red Hat is embracing Amazon Web Services, is striking new partnerships – and just this week hired an analyst/critic from Gartner to help lead efforts to sell.

Note Whitehurst’s answer to one question as transcribed by financial news website SeekingAlpha:

Mark Murphy – Piper Jaffray Companies:

“[I]n almost recent survey of Red Hat resellers, the Red Hat OpenStack product actually ranked higher in terms of momentum than any other Red Hat products has in the last three years. So I am curious how you think OpenStack feels at this stage, understanding it’s a very early stage, but in terms of buzz or enquiries, downloads, pilots, RFPs; all those kinds of leading indicators how does that feel relative to how RHEV [Red Hat Enterprise Virtualization] sales or Gluster [a relatively recent Red Hat acquisition as part of the OpenStack move] sales at this particular stage? And would you say that your conviction in the size of the OpenStack opportunity is changing at all just given what you — given the commentary that you gave us upfront on the — in the prepared comments.”

Jim Whitehurst:

“Yes, obviously there is substantially more interest in OpenStack, frankly than there has been in really any products since Linux.

“There’s a huge need for cloud infrastructure and there are not a lot of alternatives out there, most of the industry has declared that they are behind OpenStack, so you know, there’s just a lot of organic interest where things like RHEV, you know Red Hat had to go out and create it. So substantially more and that’s really what’s driving our relative bullishness in investment in as we go through this year, but yes, a different zip codes than RHEV or Gluster.”

The earnings call discussion focused on OpenStack from the start with a Credit Suisse analyst asking about “especially OpenStack” and the “growth opportunity.”

Jim Whitehurst:

“Well we’re seeing actually – I kind of I’ll say surprisingly strong interest across the board. We certainly have lot of telcos who are looking to build up their public clouds that we are working with on POCs [proof of concepts] now. They are the most obvious who are going to want to support at OpenStack. We’re seeing across the banking sector, we are seeing it in telecommunications, technology and media. It’s really pretty broad-based on OpenStack.

“Now we have some pretty sizeable aspirations in terms of POCs and design wins. We’ll have some reasonable bookings this year, but almost no revenue given the lag in the subscription model associated with OpenStack.”

So OpenStack isn’t the breada-and-butter yet.

But it darn well could be soon.

In his statement on earnings, Whitehurst stressed Red Hat’s growing portfolio of products as driving revenue north.

“[O]ur cross-selling efforts resulted in early wins for our emerging technologies which address CIO’s top priorities that are driving the evolution of enterprise computing. This demand led to closing OpenStack, OpenShift and Red Hat Cloud Infrastructure deals in all of our major geographies.”

He then noted interest and deals in financial services, media, universities, telecommunications … the list went on and on.

Sizzle, sizzle …

[RED HAT ARCHIVE: Check out more than a decade of Red Hat stories as reported in WRALTechWire.]