30 minute interview

“2005 will be the year of the Linux desktop”

Matthew Szulik Chairman and CEO Red Hat

*You now have a serious competitor in the form of Novell with Suse Linux. Did the deal have a significant impact on the enterprise Linux market?

The success and visibility of Linux has definitely resulted in new competitors emerging. Competition is good; we do not want to be a category leader in a category of one. Such a situation does not challenge the leader, and this is a prime reason why the desktop software market has not changed significantly. That said, it is extremely difficult to integrate a proprietary model with an open source model. While many companies have announced open source strategies, few have had the vision to execute these strategies. Unless these companies show reference customers and demonstrate ISV support for their platform, CIOs will not rush to implement their products. The whole market knows the situation, and I would like to quote Bob Dylan who sang, ‘You don’t need a weatherman to know which way the wind blows.’

*What’s your take on Sun’s move to open source Solaris?

‘Open Source’ has become a term that companies are touting in their marketing material. The industry should question the commitment of companies claiming to have open source strategies. Is the code really open? Red Hat has been centred on open source for over a decade. We believe this is the best model for delivering consistent value to our customers.

*Red Hat’s business model relies purely on paid support. However, most Indian CIOs prefer to pay an upfront licence fee instead of paying for a service. What are you doing to change this mindset?

I agree it is a challenge to educate Indian CIOs on the benefits of using a subscription model as most of them are not aware of its benefits. We have been trying to tell them that this model gives a CIO the opportunity to tap into the benefits of Linux with technical support from Red Hat. Upgrades are also included in the same price; we do not charge for them. Compare this with the traditional approach where you pay a huge licence fee for each user with additional expenditure towards annual maintenance fees. Further, their upgrades do not come for free. We realise that every region is unique in its own way, and are evaluating whether we should change the pricing of our subscription model in India to encourage adoption.

*What percentage of your revenues comes from subscription?

Around 75 percent. Services like training and consulting account for the remainder.

*Putting Linux on the desktop is one of your ambitions. Why do you think a Linux desktop would succeed in a market dominated by Microsoft Windows?

Desktop customers have tired of dealing with vendors whose products need frequent patch updates. With every virus attack, users are going to be more wary of choosing their operating system. Security is one of the biggest draws of using Linux on the desktop. In Red Hat Enterprise Linux 4, the improvements in security come from an optional security-enhanced kernel modification. These modifications help system administrators get rid of privileges which are loaded by default, and prevent root user manipulation. Additionally, the kernel can keep a check on applications that attempt to claim a privilege higher than that authorised. A secure desktop is what every customer wants, and we have no doubt that 2005 will be the year of the Linux desktop.

*Red Hat is increasingly going in for acquisitions. What is the importance of the acquisition of Netscape Server products and Sistina for you?

The acquisition of Netscape’s assets complements our core operating platform by adding a secure switchboard for the enterprise along with identity management. Securely accessing data across the company is critical for large enterprises. Netscape’s identity management technology lets us address this at the platform level. With Sistina, we have a file system that will be a building block for our storage strategy. Sistina’s GFS is a scalable system for Linux that lets files be stored in a single system shared by numerous servers. Sistina’s acquisition also gives us the Logical Volume Manager (LVM), a software that enables disk volume management by grouping physical disks into virtual disk volumes.

*Does India differ from other markets?

The Indian market is very well informed, and it is one of the few markets that does not follow the hype. Every technology here needs a reference customer, and unless you prove the technology and the value proposition, the CIOs stay away.

*ISV support is crucial for the adoption of Linux. What are your company’s plans to ramp up Indian ISV support for Linux?

ISVs always need a market leader to show them the way. For example, over here, we have tied up with Tally Solutions, the makers of India’s most widely-used accounting package. Red Hat and Tally will work jointly to make the software available on Linux. We expect leaders such as Tally to catalyse other Indian ISVs to port their applications on to Linux. The movement is picking up as more than 30 Indian ISVs are developing sophisticated applications in areas such as secure messaging and identity management. We are also talking to Indian players in the core banking space to port their applications on to Linux.

Srikanth R P