By 2012, more than 90 percent of enterprises are expected to use open source technology in direct or embedded forms, according to research firm, Gartner. Contrary to some perceptions that open source businesses are unprofitable, Red Hat has achieved significant earnings in this area, according to Gery Messer, president of Red Hat Asia Pacific.
"About 85 percent of Red Hat's revenue comes from our subscription-based services," Messer said. "Services like consulting, training and certification account for the remaining 15 percent of our earnings."
Support services
Messer said that customer support service is becoming "an important part" of the open source business because it has to be relevant to enterprise needs. "Our subscription-based model for clients is unlike the traditional software licensing model."
According to Messer, proprietary software "locks-in" customers into paying for the license to use it. "On the other hand, customers can continue to use open source software even after they decide to discontinue subscription," he said. "Of course, they will then no longer have access to support services and updates afforded by the subscription."
Messer said that Red Hat periodically takes the latest version of Fedora and tests and certifies it on various hardware platforms with hardware vendors. The company then releases a new RHEL version. Fedora is a Linux-based operating system developed by the open source community, and is free for anyone to use, modify and distribute.
"While Fedora is free and excellent technology in itself, it is not supported by hardware vendors, unlike RHEL," said Colin Lee, senior manager for corporate communications, Red Hat Asia Pacific. "In a sense, RHEL is the 'enterprise-ready' version of Fedora."
Important partner ecosystem
"Eighty percent of all features on proprietary software are never actively used," Messer said. "That's because development of these features is not driven by customer needs."
Messer said that consequently, proprietary software often needs new versions to keep up with changing customer requirements. "On the other hand, open source software development is customer and community driven, leading to a higher quality and more secure product."
Besides major hardware vendors, independent software vendors, distributors, and system integrators also partner with Red Hat on open source initiatives. "More of our customers, many of whom are also our partners, are investing in RHEL and JBoss Enterprise Middleware to build sustainable businesses," Messer said. "The ecosystem of partners is very important to us."
"IT infrastructures and data centers are moving towards adoption of virtualization technologies," Messer said. "In response, Red Hat is working on developing next generation virtualization technology that will be open source-based."
The company recently acquired Qumranet, Inc, including its Kernel Virtual Machine platform and SolidICE virtualization solutions. According to Red Hat, the acquisition facilitates the company's efforts to drive comprehensive virtualization management solutions into Linux and Windows systems.
Messer also noted the importance of cloud computing to Red Hat. "At the end of the day, I believe cloud computing will run on Linux."
Increasing adoption
"Asia-Pacific enterprises are rapidly adopting open source platforms," Messer said. "No country is lagging behind others in the region in terms of adoption, although adoption rates may vary between the government and private sector within each nation."
Additionally, there is growing interest in taking Red Hat certifications in the region, Messer noted. "India has more than 14,000 Red Hat certified engineers, the highest number in the world, mainly due to its large population."
Messer frowned upon alleged cases where a software vendor takes open source code, modifies it, but only releases the unmodified version back to the community. The vendor then commercializes a proprietary product from the modified source code. "It would be difficult for us to partner with software vendors that do not fully adhere to the open source philosophy," Messer said.
"The industry calls such a practice 'forking', which is like going back to the path of proprietary software development," Lee said.
Microsoft's response
Software giant, Microsoft, has also responded to the increasing popularity of open source technologies among enterprises. "At Microsoft, we consider open source as one part of a broad spectrum of choices for software development and business models," said Matthew Hardman, platform strategy manager for Microsoft Singapore.
Hardman said that the company has contributed to technologies that are "deemed open source". He noted for example, that PHP, a technology used to build web pages, ran into multiple performance and scalability issues on Windows Server software.
"With the introduction of Windows Server 2008 and host technology such as Fast CGI, we are now able to run PHP up to 200 percent faster than Linux," Hardman said. "We have also contributed code to the PHP libraries for database support, making it easier for PHP developers to connect to Microsoft databases."
The company seeks to enable customers to have a choice of platform, regardless of the technology they want to use, according to Hardman. "At the same time, we want to contribute back to technology and help drive the next generation of innovation."
Hardman said that Microsoft also supports the open source methodology of sharing ideas and innovation in the developer community. At CodePlex, the company's open source project hosting website, Microsoft employees and the developer community work on some 6,000 open source projects. "We are doing some really interesting things here from blogging engines to code that can interact with the 'World of Warcraft'," Hardman said.
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