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Red Hat drives growth in cloud business without cannibalizing itself (+ video)

Red Hat

May, 10 2017, 7:16 AM

Editor's note: Technology Business Research Analysts Sanjay Medvitz, Geoff Woollacott and Michael Soper report on Red Hat's annual Summit in Boston.

HAMPTON, N.H. - In an IT landscape driven by emerging technologies and rapid transformation, Red Hat is uniquely positioned among peers to drive new business growth on the backs of its sustainable business model and core offerings.

While many traditional vendors, including IBM, Oracle and VMware, push emerging cloud-based technologies to drive long-term success, high growth forecasts must be dampened by the reality that emerging technology gains must offset declining legacy revenue streams and often cannibalize traditional solution sales.

This dynamic does not exist for Red Hat, though, as the vendor surges ahead with consistent results from its traditional Red Hat Enterprise Linux (RHEL) business alongside its high-growth AppDev and cloud-enabling technologies.

[VIDEO: Watch the opening video from Red Hat Summit at https://www.youtube.com/watch?v=ObI8wXQkbC4 ]

Red Hat’s native subscription-based business model and ongoing growth from RHEL provide insulation from the aforementioned challenges, enabling it to thrive while pursuing an increasingly cloud-centric strategy with a balanced financial approach.

While Red Hat has continually expanded its portfolio beyond its core RHEL business, the vendor has strategically maintained its open-source roots and RHEL as a common base when innovating emerging solutions. As a result, Red Hat competes for infrastructure and application modernization opportunities with a compelling value proposition centered on flexibility and lower-cost options inherit in the open nature of its stack of offerings.

Over 6,000 analysts, customers and partners took over the Boston Convention and Exhibition Center May 2-4, 2017, to observe and explore advancements around Red Hat’s key technologies and strategies during Red Hat Summit 2017. The event displayed a level of confidence and fluidness in strategy and road map, as Red Hat demonstrated the flexibility and growing value of its expanded portfolio within modern IT environments. Themes such as hybrid IT, cloud-native app development and containerization permeated executive presentations and breakout sessions.

The recurring theme “Any application. Any environment. No lock-in,” highlighted Red Hat’s focus on enabling next-generation consumption by providing customers choice and flexibility. Additionally, the vendor outlined its three initiatives for FY2018: RHEL expansion, enabling hybrid cloud infrastructure, and supporting and innovating with containers.

RHEL provides a gateway to cloud success

Despite cloud initiatives rising to the forefront of Red Hat’s strategy, the ongoing importance of RHEL to the vendor’s long-term success could not be overstated throughout the event. Red Hat’s core business built on Linux continues to drive consistent quarterly growth of 10% to 15% while many software peers battle slowdowns in their traditional businesses. While this dynamic alone provides Red Hat a leg up in the competitive software market, the vendor has also strategically expanded its portfolio by placing RHEL at the center of its emerging technologies, creating a model that enables its core RHEL business to fuel adoption of new solutions.

With RHEL as the common foundational layer across Red Hat’s cloud platforms, including OpenStack and OpenShift, the vendor enables customers using the Red Hat stack to easily deploy and migrate workloads across RHEL-based infrastructures.

Red Hat executives highlighted the impact that growing the core RHEL base will have on facilitating emerging solutions adoption, citing these are the customers moving to emerging solutions. Closely tying RHEL and emerging solutions not only facilitates growth across the portfolio but also helps secure the RHEL base for long-term sustainability.

Unlocking hybrid cloud value through infrastructure flexibility

As complexity has grown with the emergence of hybrid and multicloud environments, Red Hat has honed its cloud strategy around enabling customers to deploy, migrate and manage workloads seamlessly across various infrastructures, increasingly emphasizing its container platform or PaaS offering, OpenShift. The top three cloud vendors — Amazon, Google and Microsoft — offer development platforms but possess barriers such as code lock-in and minimal interoperability, and therefore run the risk of being disrupted by more open and flexible offerings such as OpenShift.

As such, Red Hat increasingly innovates and partners around OpenShift to extend customer deployment options at both the hardware and cloud infrastructure levels, driving a value proposition of enabling customers to avoid vendor lock-in. The vendor partnered with IBM and Google in 2016 to increase flexibility with IBM Power Systems and Google Cloud Platform, respectively.

Next: AWS partnership and much more

(C) TBR





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