Think of your business software as the vehicle your business will use to drive you to success, and think of companies like Microsoft and Red Hat as dealerships. With most software dealerships like Microsoft, you only have a hand-full of models to choose from, you pay for the vehicle, you pay for insurance, you get some limited mechanical support after the sale, and any after-market customization is not only discouraged, but illegal. If you want a newer model of your vehicle, or you think you want a vehicle that has different capabilities, you’ll have to buy a new vehicle.
What makes Red Hat/open source different is you can pick any vehicle you like to drive you to success for free, you just pay for your mechanical support and insurance policy. Those after-market customization you put on your vehicle to make it look cooler or work better are not only covered under your insurance policy, but encouraged and supported by the manufacturer. Red Hat is continuously helping you make after-market customization to improve the performance of your vehicle. So just like they say, two heads are better than one, 7 billion heads are better than two. Open source opens up the channels of creativity and collaboration between not only everyone creating the software, but also from everyone using it, and that is a powerful tool in the world of technological advancement.
There are all kinds of vehicles to choose from, each with unique features and capabilities, some of which are so new; we might not even know how to operate them yet. For that, Red Hat has you covered by offering training services.
So why choose Red Hat over some other open source company? They just celebrated 25 years in business in a world where many open source companies have a hard time making their business models work, so they have longevity in a field that they pioneered. Their market share has been rapidly increasing while their major competitors’ market shares have been steadily decreasing. And now that they have partnered with Microsoft, and Red Hat’s Linux OS will be supported by the Microsoft Azure platform, expect to see Red Hat’s market rapidly expand.
Revenue at Red Hat is not slowing down. Their revenue has grown a steady 15-17% year over year for the last decade and they have consistently beaten earnings estimates for the last 8 years. While Microsoft’s gross margin has dropped 20% over the past 10 years, Red Hat has maintained a steady gross margin of 85%. They’ve grown their company from a couple hundred employees when they first IPOed to currently over 9300, with plans to add several hundred more employees over the next year, especially given their aggressive acquisition strategy.
Red Hat has acquired 13 other open source companies over the past 10 years, and has invested heavily in 5 others. Don’t be surprised if they look into acquiring some of those with their $661 million in free cash flow (which is double what it was 5 years ago).
Red Hat offers all three levels of cloud computing (SaaS, PaaS, and IaaS) in over a million open source projects. So whether you are an end user looking for the right software, a developer in need of the proper platform from which to launch, or you’re in need of storage space for your operations, Red Hat has your cloud covered.