CRN Interview: Red Hat CEO Matthew Szulik

Red Hat last week went on the offensive in the battle over Linux intellectual property. During the LinuxWorld conference in San Francisco, the Linux distributor revealed that it had filed suit against SCO, which claims its copyrighted Unix code was used illegally in the Linux kernel and recently asked Linux users to ante-up a licensing fee to avoid litigation. At the same time, Red Hat pledged $1 million to a fund that would help customers pay for any legal costs that might be incurred from potential SCO action and encouraged other companies to do the same. CRN Senior Editor Elizabeth Montalbano sat down at the show with Red Hat CEO Matthew Szulik to discuss the company's recent actions as well as other open-source issues.

CRN:: It seems that by setting up a fund to defray possible legal costs for customers because of SCO licensing, you're recognizing that there is a potential for customers to run into problems if they are using Linux. What do you think about that?

Szulik: I don't think that's the way we approached it. When you look at the evolution of Red Hat and you look at the evolution of open source, the roots are continuing to be tied to people who make voluntary contributions. I think our motive was to ensure that nonprofit organizations and other commercial entities that are developing software for distribution under a GPL license know that there's a source that they can count on if they ever run into this situation in the future. We think it's really important to give back [to the open-source industry]. It's really important to us that we provide longevity to this industry at a very critical stage.

CRN:: Are customers fearful of legal proceedings from SCO?

Szulik: No. I think you have one class of customers that is full-speed ahead, that the financial, economic and technical benefits of the replacement of aging Unix systems to Red Hat Linux on Intel on AMD servers is still compelling. ... I think you have those customers that our actions [against SCO] sent a very strong signal that we will take responsibility to find a solution to this problem as quickly as possible, and I think increasingly those customers will see benefit in our actions. I think you will find that to those customers that were choosing to sit on the sidelines, [SCO] becomes the objection they use not to move forward. But as you well know, the rate of customer adoption globally, of customers deploying Linux, Sendmail, Apache, Tomcat, [proves] this isn't a product-vs.-product issue, this is an entire paradigm shift of how software is developed, how software is serviced, an entirely new relationship between a customer and a vendor.

CRN:: Do you think Novell's purchase of Ximian will promote the use of Linux on the desktop?

Szulik: I'm ecstatic for [Ximian] co-founders Miguel [de Icaza] and Nat Friedman. I think that they are smart guys. ... [The deal] continues to validate the companies that can build technology around open-source software, can produce economic value.

CRN:: Will the Novell-Ximian deal create a competitive situation for you in the Linux desktop space?

Szulik: Like many open-source projects, just because the developers are on a different payroll doesn't mean they'll stop collaborating. I think it really boils down to what's the organization's core commitment. We're a pure play, we're an open-source company.

CRN:: Do you think it's critical for Linux companies that Linux on the desktop is successful?

Szulik: 'Which desktop?' is the question I'd ask.

CRN:: A Linux client operating system; something comparable to Windows.

Szulik: I think there is a siren song there that calls the media and other industries to the attention of what is a robust opportunity when people like Microsoft have 96 percent [market share]. But for our business and what we're most focused on, which are the areas of management problems enterprises have faced, I don't see any [proof of that opportunity], nor do I speak with any CIOs or business partners in the field that are looking to swap out a desktop on a one-to-one basis. The hard problems that are financially draining for organizations right now that we're seeing are all tied to [asset] management.

CRN:: Could you elaborate on that?

Szulik: The desktop is certainly an important area, but when we're inside now speaking to corporations the areas they are trying to solve are around configuration management, patch updates, scheduling, other hard problems that are causing their systems not to perform the way they want. Those are the areas we see as more strategic at this moment in time and of course ultimately, [our strategy] will find its way toward the Red Hat Desktop implementation.

CRN:: Which do you think Linux is replacing more--Unix or Windows?

Szulik: Definitely Unix, in the first phase.

CRN:: Do you think that will change, and when will that shift happen?

Szulik: You know it changes a lot by geography. When you leave the United States and you get into the Latin American markets, and you get into the Chinese and Asian markets, you don't see nearly the deep commitment and the install base [for Windows]. ... There are popular opportunities across Europe and Asia for [a Linux desktop OS]. Certainly in the North American marketplace, the situation is different.

One of the reasons our strategy has focused on the server side in the back office is because that is an area Microsoft has not been successful in. They certainly have proven themselves in front-end environments. Now where the mission-critical [applications are] hosted, where the databases are being run, that's an area that we continue to grow in sophistication and competency.

CRN:: Can you talk about some of the success your channel partners have had in implementing Linux?

Szulik: I think it's growing. I think we are working globally with channel partners. I think we have now moved and more and more of our product into two-step distribution, more of our retail product into tier distributions, people like Ingram [Micro]. [Distribution is] especially popular in Europe and in Asia. I expect you should expect to see more about this in the next 60 to 90 days, in terms of more broad-based support for developing relationships on a local basis.

CRN:: Can you talk about the trends you are seeing in midmarket adoption of Linux?

Szulik: I believe last quarter we believe we generated 1,400 new customers. Clearly those customers are replacing older systems, legacy environments, looking to upgrade that want the low-cost, high-value proposition that Linux and open-source represent. Those are the customers that are now adopting Red Hat. They really range from the 2,000-person company in Greensboro, N.C., all the way to a dental office that is running four servers for their patient billing. We're seeing really broad, broad adoption across that. We're seeing strong take-up in the academic environments as you might imagine.

CRN:: How important is your relationship with Sun Microsystems, which is using your distribution on its Intel-based, 32-bit servers?

Szulik: Sun resells Red Hat Linux. They are a reseller.

CRN:: Are you seeing revenue from that or is it just Sun's way of having an alternative to Solaris for their customers?

Szulik: What their plans and their strategies are is up to them to implement. They've just begun shipping [Red Hat] on their hardware platform; it became available in mid July. So we're just in the beginning stages of it. I think it's a better question for the guys from Sun.

CRN:: Do you think it was a good plan for Sun to distribute Red Hat Linux on those servers?

Szulik: The two-part answer is, we love choice. Having said that, I think that that same question could be asked of anybody on that show floor downstairs [at Linuxworld]. What is the commitment to open source and moving open-source software forward and how strategic is it to their business.

CRN:: Can you talk about the momentum behind new applications for Linux?

Szulik: All of the major enterprise applications are running [on Linux], which I think is great work and speaks to the stability and reliability of the platform. That's great news. With this growing consolidation, I'm not sure eventually how many applications will be left. When you look at the evolution of the industry and the technology I think the notion of prepackaged applications will change and evolve.

CRN:: How will that change?

Szulik: Well, I think the notion of Web services. ... Application-to-application communication will certainly take a larger role. I think that will be really exciting, about being able to move, and Red Hat moving up the stack, if you will. It will be able to provide a lot of range of choice in general.

CRN:: Do you think there will be consolidation among Linux vendors?

Szulik: Could be. I'm not a big fan of the notion [because] more and more you limit choice. There is an economic reality right now of the tech industry that says it's very expensive to compete globally and deliver high levels of service. We all know that. I think that is what it is. I think we'll see soon, I'm sure.

CRN:: Do you think the JBoss Group's decision to license J2EE from Sun has any negative repercussions for open source?

Szulik: You need to take a look at our news [to bundle open-source Java tools with Red Hat Linux]. We think there are perhaps other solutions available that may not carry with it some of the baggage that the other activities have taken with it. There's a big difference between building a business and, most importantly, figuring out what your long-term strategy is to service customers. Clearly, you can't get into the activity halfway and all of a sudden say, 'We didn't think through this.' It is certainly a difficult path to change and move an industry forward, but I think our vision has been clear all along, and our commitment to the GPL and an open-source model is clear. I think there's a big difference between selling technology and having a bold vision to change the industry.