Enterprise Linux Log

Mar 28 2008   1:53PM GMT

Red Hat growth reflects growing open source adoption

Don Rosenburg Profile: Dkr

This blog post was written by Pam Derringer, SearchEnterpriseLinux.com’s news writer.

Red Hat Inc.’s enviable earnings boost for 2007 is a clear reflection of the market’s growing confidence in open source software, according to Stephen Elliot, a research director at IDC.

Rather than a signal of one player’s increasing dominance, Red Hat’s $523 million in revenue last year – a hefty 31% increase – shows that open source “is a trend that continues to move forward.

“There seems to be enough of a market to go around,” Elliot said. “Each company has its own strategy,” he said, citing Novell Inc.’s recent acquisition of PlateSpin Ltd., developer of innovative virtualization and management tools. “The trend [toward open source] continues to go forward.”

“Red Hat’s revenue growth shouldn’t be surprising.” he continued. “The current economy creates almost a perfect storm in terms of timing because midsized companies are looking at lower-cost options now.”

But it’s not just a tougher economy that has boosted open source companies. A key factor in the growth of companies such as Red Hat and Novell is their single-minded focus on product development and customer support, Elliot said. Another critical growth component is the ability to spot new technologies such as virtualization or enterprise management and incorporate them quickly into their own offerings, he said.

An ongoing challenge for open source companies is continued improvement in interoperability, not only with Windows products but also among their own offerings, Elliot said.

The growing adoption of open source “will continue to move the needle forward … and continue to chip away at [proprietary software adoption] with some success,” he predicted. “Open source isn’t right for everything but [its increasing acceptance] will drive additional discussions where open source wasn’t previously thought of as a viable alternative.

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