Red Hat Sees Growing Influencer Role For Solution Providers

And Red Hat, while best known for its iteration of the Linux operating system, is seeing an increasing number of opportunities for its JBoss middleware and the vendor’s virtualization technology, Whitehurst said in an interview Monday.

The interview came during a two-day partner conference Red Hat is holding this week in Boston -- the company’s first -- that precedes the company’s general Red Hat Summit customer conference Wednesday and Thursday.

“The issue for us has been -- and this is the reason the channel is so important for us -- the average, mainstream, Fortune 1,000 company isn’t necessarily hiring Ph.Ds in computer science. Those customers are relying on their partners to make those technology decisions,” Whitehurst said, referring to IT strategies such as adopting open-source technology or cloud-based IT services.

In a presentation to about 140 partners Monday, Whitehurst said 56 percent of Red Hat’s $748 million sales in fiscal 2010 (ended Feb. 28) were generated by VARs, systems integrators, hosting partners and OEMs. While channel sales have accounted for as much as 60 percent of all sales in some quarters, Whitehurst said he’d like to see that number grow given the increasing influence of solution providers in IT decision making.

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“It’s clearly not enough given where the IT decisions are getting made,” he said. “I’d feel a lot more satisfied at 70 percent. It’s one of the reasons we need to grow this [partner] ecosystem.”

While there have been questions in the past about Red Hat’s commitment to the channel, Red Hat executives this week appeared intent on making it clear how much importance they attach to the channel.

Speaking to partners, Roger Egan, head of North American channel sales, said Red Hat channel partners have tripled their revenue during the last three years. Partners identified $20 million in net-new business through the company’s deal registration system in fiscal 2010. And in the last year approximately 400 partner sales and technical staff have become certified by Red Hat.

“You are an integral part of the value-add that Red Hat brings,” Whitehurst said, speaking to the partners.

On Monday, Red Hat debuted a new partner portal and community system, the Red Hat Partner Center. The company said the portal provides sales enablement and marketing tools, training resources, subscription management, case submissions, an online forum, and materials on cloud computing, middleware and virtualization.

Red Hat is also seeing an uptick in IT spending and the vendor is snagging a “disproportionate share” of that spending with its JBoss middleware, Whitehurst said in the interview. And many of those sales are through resellers. “Our partners are much more interested in middleware than the operating system. The operating system, frankly, just doesn’t drag along a lot of revenue.”

Whitehurst and other Red Hat executives said the company, with its modular, scalable, open-source software, is well positioned for changes now sweeping the IT market. Business users expect the same level of simplicity and low cost they get from consumer-facing IT like Google and Facebook and complex, expensive IT projects with long lead times are no longer acceptable.

“The model for how [businesses] get their technology sourced today isn’t working,” Whitehurst said. “Our model is just fundamentally more customer-friendly in terms of selling what people want, the amount they want, when they want it.”

And the CEO said Red Hat also is positioned for the move toward cloud computing. “Clouds run open source and Red Hat is building a position as the leading provider of infrastructure for clouds.”

In a pitch to channel partners Ashesh Badani, senior director for JBoss enterprise middleware, said JBoss offers partners the opportunity to penetrate new “greenfield” accounts, replace IBM WebSphere and Oracle WebLogic middleware implementations, and sell the commercial edition of JBoss to businesses now using free “community” versions of JBoss and Tomcat software.