Q&A: Red Hat CEO looks outside U.S. for growth

Carol Sliwa, Computerworld

In an interview at Red Hat's inaugural user conference here, CEO Matthew Szulik said that the best opportunities for the company's open-source software stack lie outside the US.

Q: What hope is there that customers will go to a full open-source software stack when they already have existing products for things such as directory services and identity management?
A: That's true. But I think you have to look at the globe. First of all, where do we see the fastest take-up and adoption of our desktop technology? It's in Europe and Asia. Organisations that have or are already in the process of moving their legacy systems forward -- or are looking at and building net new environments -- either they're leasing or [their] existing architectures are just stagnant. They now have the benefit of Linux and open-source technologies, and they're asking for things that are new and different.

Q: How do you expect to get users to move off Microsoft's Active Directory?
A: You raise a good point. Maybe within the next 12, 18, 36 months, Active Directory in the U.S. won't be the place where the directory's capability is, [where] the certificate management capability happens. Maybe it will happen in Spain. Or maybe it will happen in England. Or maybe it will happen in Poland or Russia. There were $19.5 billion of Linux-related technologies sold in 2004. This is an incredibly large market which we're competing in, and Red Hat's business opportunity is really at such an embryonic stage. To me, it's no longer a question of if. It's just a matter of when.

Q: Do you consider your greatest opportunity to be abroad, where companies might have less-mature infrastructures than US companies do?
A: Definitely. And I think you see a different set of behaviours happening in those markets. There is not the bias toward an indigenous US supplier. There is a technically educated work force in certain markets that has now grown up with Linux and open-source, like in Germany, that has the literacy and the capacity and the desire to change. You're starting to see markets in India come to the fore, systems in China, Brazil.

Q: Will it be worth the resource expense for Red Hat to enter the directory market?
A: First of all, it already has a rich customer base. ... And to build up this open-source architecture, we had an absolute dependency on providing an open-source directory to deliver authentication, improved capabilities around identity management, [and] ultimately the ability to manage the hundreds of thousands of devices that will somehow be connected to someone's infrastructure for remote management and single sign-on. If we didn't do that, then what are we going to do?

Q: What markets do you think you might get into after this?
A: What is the famous Gordie Howe quote about the hockey puck? You want to go to where you think the puck is going. ... We want to look at where software can continue to be delivered as a service -- to deliver value around those areas, as opposed to taking on the economics of a work force. ... The classical software packaged product is only going to decline in value.

Q: Will you ever get into the application business?
A: I don't think the application business is ever going to look the way that it's looked the last 25 years.

Q: How do you think it will change?
A: We're doing software as a service. ... I think it will change our relationship to applications. Component-based development because of open-source software is increasingly going to become a reality. I think there will be a different problem to solve.