Red Hat CEO Whitehurst Blasts Software Patents

Red Hat is the biggest open source software company, but it’s got a long way to go, says the company’s chief executive Jim Whitehurst.

On a visit to London he criticised software patents, spoke on the difficulty of changing public sector practices, and repeated a goal to make Red Hat a £1 billion company next year – after re-affirming the company’s strategy.

Selling free software is hard

“If open source is such a major trend, why is Red Hat the only publicly traded open source software company?” he asked at a round table event for the press.

Open source development is superior, producing fewer bugs per thousand lines of code, he said, likening it to the Japanese kaizen manufacturing method (which incidentally originated with US businessmen).

“Open source techniques will radically change the way software is developed,” he said.  But despite this, it doesn’t make lots of money. There may be some smaller private open source companies which make money, but Red Hat, he said, is “the only materially profitable open source software company.”

Why is this?

“The simple answer,” he said, launching into an exposition of Red Hat’s business model, “is that selling free software is hard.”

“The very things that make open source such a powerful development method make it very difficult to implement in an enterprise.” Open source products are released early and often, but this would be death to a production system in an enterprise, he said.

Frozen code allows SLAs

As is well known, Red Hat contributes to the fast-moving Linux development process, but ships releases which are “frozen” every three years and which are controlled and supported for ten years. “If you don’t control the code, how can you provide SLAs [service level agreements]?”

Red Hat spends millions of dollars per release, which allows it to make it solid enough for people to build trading applications on top of it. And of course, as he is fond of pointing out, “over half the world’s equity trades happen on top of Red Hat Enterprise Linux,” because it is – he believes – the world’s most secure and stable operating system.

“Bits are free and functionality is free,” he said. What the company sells is innovation and stability – and it’s never raised the price of the product.

Given the price is fixed, the company’s double-digit revenue growth comes from new customers, and from increasing business with existing customers, he said.