Red Hat CEO Sizes Up Rivals

When measured against other Linux software companies, Red Hat stands tall. The company has no debt and $300 million in cash. Furthermore, its enterprise business is up 44 percent on a year-over-year basis, and sales of its Advanced Server product have exceeded internal projections. For 2003, Szulik wants to scale Red Hat software to more effectively compete in the 64-bit space, and aggressively pursue the desktop market and opportunities in managed services. In an interview with VARBusiness senior executive editor T.C. Doyle, Szulik sizes up his competition.

VB: We noted that when Sun CEO Scott McNealy rolled out new, low-end Linux boxes, he made it quite clear that he'd like his company to take a greater role in determining where Linux goes from here. Is this some sort of hijack maneuver?
Szulik: Well, it's really kind of interesting. I heard him say the same and read the same in print. I really think it boils down to what your brand stands for. Red Hat is an open-source company and is seen on a global basis for that%85To call yourself a Solaris and SPARC vendor one day, and all of a sudden call yourself an Intel and Linux vendor the next, I think, has to send a very confusing message to the marketplace.

VB: What about IBM? They have been a little more clear in their interest and dedication to Linux.
Szulik: IBM was an original investor in Red Hat, so there's been a long, positive relationship between Red Hat and IBM. For us, we couldn't be more happy with the relationship. They bring us access, they help us build third-party channels, etc.

VB: Microsoft?
Szulik: Never heard of those guys%85

VB: CEO Steve Ballmer says they cannot compete with Linux on price. It's the one platform that defies their traditional go- to-market approach, which has been to undercut the other guy. This makes them recalculate how they go to market and compete against guys like you. At the end of the day, is Microsoft a foe, friend or what to the Linux community?
Szulik: I have always said publicly that our success is not dependent on Microsoft's failure%85So when we look at our strategy, I don't think we have people waking up in the traditional sense the way they did at Lotus 15 years ago with a focus on trying to wax Microsoft. I think we have an awful lot of confidence in the role open source can play with regard to intellectual property, copyright, patents and, most importantly, the value we can continue to create. So I guess, as it relates to our competition, it is certainly my view that Microsoft will not choose to compete on a technical basis because I don't believe that that is a successful area for them to compete with open-source technology. But I anticipate that they will try to compete on legal grounds. And, after all, they are the largest law firm in the industry.

VB: What about the UnitedLinux effort? Do you ever see yourselves playing a role there?
Szulik: Hard to see us playing a role there, frankly. Our relationship is with the open-source community. I think the more people contributing to the open-source model and the open-source community, the better for the customer and the better for competition, which will, in turn, help us to build better products. I don't really know much more about the UnitedLinux folks%85Right now, the Global 2000 customers are trying to minimize the number of suppliers they are trying to do business with. Increasingly, the CIOs I speak to have already gone and checked out our income statements. If they are going to take a risk on Linux and open source, they want to make damn sure that the vendor is going to be financially viable.