Red Hat continues to execute an increasingly cloud-centric strategy that focuses on expanding OpenStack and OpenShift, the vendor’s IaaS and PaaS solutions, to capture hybrid cloud, application development and digital transformation opportunities.

CY4Q16 revenue increased 18% year-to-year to $615 million, while Red Hat’s application development-related and emerging technologies segment, which includes OpenStack and OpenShift solutions, grew 33% year-to-year.

TBR believes this growth demonstrates initial success of the vendor’s recent sales and channel investments around training and education to drive emerging technologies adoption.

With continued growth from its’ core RHEL business and a native subscription-based business model, Red Hat is uniquely positioned for success, avoiding portfolio and delivery model shifts to offset legacy declines faced by many software vendors such as IBM and VMware. TBR expects Red Hat’s hybrid cloud solutions to become increasingly attractive over the next few years due to flexible deployment options and easy integration capabilities inherent with open-source solutions.

Close ties with Dell Technologies, HPE, AWS, Microsoft and Google enable customers to run anywhere on-premise or in the cloud, and paired with a stack of open-source solutions that avoid proprietary API’s, Red Hat’s cloud portfolio provides significant flexibility, particularly to larger enterprise customers who want to avoid vendor lock-in when moving to the cloud.

Red Hat innovates in parallel with evolving OpenStack customer demands

Red Hat’s successful business model in enterprise Linux provides the vendor a framework for its push into cloud markets, particularly in becoming the leader for enterprise OpenStack. The growing maturity and evolving customer needs associated with open-source cloud solutions, however, require Red Hat to maintain consistent innovation and partner expansion to keep pace with demands and drive awareness. The vendor announced the following cloud developments in the quarter:

In December Red Hat announced the expansion of its OpenShift platform to the Google Cloud Platform forming a new public cloud offering. Customers will now be able to run OpenShift Dedicated on the Google Cloud Platform to develop and manage applications with Red Hat acting as a service provider for administrative, management and consulting tasks.

The solution leverages the same code base as Red Hat OpenShift Container Platform to enable easy workload migration across public and private clouds. Customers also gain access to Google Cloud services. Red Hat’s OpenShift platform is already available on AWS.

Additionally, Red Hat made its full JBoss Middleware stack available on its OpenShift platform. 100% of the vendor’s JBoss Middleware portfolio is now available as containerized deployments.

The vendor also announced the availability of Red Hat OpenStack Platform 10 which improves workload management, orchestration and scalability. Key features include granular customization to allow independent use and scaling of various OpenStack services, and distributed continuous integration (DCI) with partners such as Dell Technologies and Rackspace. DCI provides collaborative test and development for more efficient releases of Red Hat OpenStack Platform.

With the new announcements Red Hat continues to build out capabilities and integrate solutions within its portfolio, making adoption of Red Hat’s full stack of cloud solutions more attractive. TBR expects Red Hat to continue to be leveraged for private cloud functions in the short-term and increasingly grow in the hybrid cloud space as their solutions mature and adoption of hybrid environments accelerates.