Red Hat

About Red Hat

Red Hat doffs its cap to businesses that embrace open-source computing tools. The company dominates the market for Linux, the open-source computer operating system (OS) that is the chief rival to Microsoft's Windows operating system. In addition to its Red Hat Enterprise Linux OS, the company's product line includes database, content, and collaboration – more... management applications; server and embedded operating systems; and software development tools. Red Hat also provides consulting, custom application development, support, and training services. The company's business model is a mix of providing free, open-source software paired with subscription-based support, training, and integration services.

Operations

Red Hat's JBoss unit specializes in open-source middleware software, including application servers and messaging systems which are used to develop and deploy applications throughout an enterprise that are accessible via the Internet, intranets, extranets, and virtual private networks.

Financial Analysis

Red Hat's revenue continued its upward march in 2012, cresting the $1 billion mark on growth of about 25%, while net income rose 36% compared with 2010. Both subscription and training and services revenue rose by about one quarter for the year on strong global demand.

Strategy

Although Red Hat originally offered support for consumer-oriented Linux products, the company shifted its focus entirely to the more lucrative business of supporting and servicing Linux technologies in enterprise environments. While Linux has failed to gain much traction against Microsoft's Windows operating system in the consumer space, open-source platforms have been much more successful in corporate deployments, especially for back-end tasks such as managing data center operations including virtualization, server and data management, and enterprise application integration.

With interest in open-source technologies growing in the Asia/Pacific region, in 2012 Red Hat expanded two engineering centers in India. Located in Pune and Bangalore, the company's software engineering teams in India work with local universities, research organizations, and agencies to develop standards for, and support the adoption of, open source in the region.

Mergers and Acquisitions

Red Hat acquired Massachusetts-based open-source integration and messaging provider FuseSource from Progress Software for an undisclosed sum in 2012 to enhance its ability to deliver application integration products to commercial customers. Later that year it agreed to purchase ManageIQ for some $104 million to enhance its hybrid cloud management services.

In 2011 Red Hat expanded into the storage market with the purchase of California-based Gluster for more than $136 million in cash. Gluster's open-source file system enables cloud-based storage of big data. Customers such as Brightcove and Pandora Media have used the GlusterFS open-source system to store large amounts of unstructured data (pictures, audio, video, etc.) and minimize their investment in conventional hardware-based storage systems. – less

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