Red Hat CEO Optimistic About OpenShift 4.0 as RHEL Lags

by Sean Michael Kerner

Red Hat reports second quarter revenue of $823M, as interest in container technology continues to grow.

Red Hat's business model has long been founded on sales of its core Linux platform, but moving forward that might shift somewhat as organizations increasingly move to the company's OpenShift container platform.

Red Hat reported its second quarter fiscal 2019 financial results on Sept. 19, with revenue coming in at $823 million, for a 14 percent year-over-year gain.

Looking forward, the company provided third quarter guidance for revenue to be in the range of $848 million to $856 million, which is up approximately 13 to 14 percent. Analysts on Red Hat's earning call were concerned about an apparent deceleration in the company's renewals for its flagship Red Hat Enterprise Linux (RHEL) platform.

"The better OpenShift does and the more time we're spending on that, the less time we're selling RHEL," Red Hat CEO Jim Whitehurst said during his company's earnings call. "There's just so much momentum around OpenShift right now that it does kind of eat into selling time on RHEL; we feel really good about the macro trends around Linux, and it’s just about the ability of us to have the bandwidth to pick it all up."

Whitehurst said he was in Europe last week and out of the 30 customer meetings he had, 20 were specifically about OpenShift. He said OpenShift is a topic people want to understand as they figure out how to do deploy and manage containers.

"I do think shiny object syndrome gets us all, where we're talking about OpenShift and Ansible because there is so much traction around them," Whitehurst said. "But overall, it's hard to find a customer that's not looking at or starting to use OpenShift in some way, which is great to see."

Red Hat's Chief Financial Officer Eric Shander emphasized however that even as customers are starting to purchase OpenShift, RHEL is embedded into that.

"We certainly don't break it out," Shander said. "We don't necessarily view it as a bad thing, as OpenShift is continuing to gain momentum and traction because by default they are using RHEL in that product."

OpenShift 4

During the analyst call, Whitehurst was asked about the integration of CoreOS into Red Hat. CoreOS was acquired by Red Hat for $250 million on Jan. 30, adding new container capabilities to Red Hat's platform. Whitehurst said CoreOS has a set of features in its container platform that Red Hat is integrating into OpenShift.

"The CoreOS team is focused on ease of use from the user's perspective while we bring incredible content associated with RHEL and the RHEL ecosystem and how we bring the lifecycle e together," Whitehurst said. "We've started to bring some of those technologies into OpenShift in the various dot releases and certainly as we get into OpenShift 4, you'll see I'll say basically the entirety of their core feature set integrated in."

"We're really excited about it, and I think that's one of the reasons we're seeing so much traction with OpenShift today," he added.

Sean Michael Kerner is a senior editor at ServerWatch and InternetNews.com. Follow him on Twitter @TechJournalist.

This article was originally published on Thursday Sep 20th 2018
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