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Red Hat's Largest Deals Now Coming from OpenShift Containers

Tuesday Mar 27th 2018 by Sean Michael Kerner

While Linux, OpenStack and middleware remain important core elements of Red Hat's business, it is the company's Kubernetes-based platform that is currently leading the way.

For the last 25 years, Linux has been the cornerstone of Red Hat's business. In the fourth quarter of Red Hat's fiscal 2018, it was the company's OpenShift container platform, based on Kubernetes, that accounted for the company's largest deals.Red Hat OpenShift

For the fourth quarter of fiscal 2018, Red Hat reported revenue of $722 million, for a 23 percent year-over-year gain. Looking at the full year, revenue for fiscal 2018 was reported at $2.9 billion, up by 21 percent from 2017.

Looking forward, Red Hat provided full year fiscal 2019 guidance for revenue to be in the range of of $3.425 billion to $3.460 billion, up approximately 19 percent.

"The largest deal was virtually entirely OpenShift, actually two of the top four were primarily OpenShift," Red Hat CEO Jim Whitehurst said during his company's earnings call. "Two of the others were virtually entirely OpenStack."

OpenShift is not growing at the expense of Red Hat's other technologies, either. Red Hat CFO Eric Shander said during the earnings call that high-growth is coming from OpenShift, Ansible and OpenStack technologies.

"The higher growth rates in these emerging technologies were partially offset by a slight moderation in the growth in our middleware offerings as some customers begin to shift their workloads from traditional physical deployments to container environments, where they would run middleware as a service within the OpenShift environment," Shander said. "We believe these initial efforts to use middleware as a service will increase over time as customers shift more applications to container environments, benefiting our middleware results over the long run."

Container Competition

During the earnings call, Whitehurst was asked how Red Hat's OpenShift business compares with rivals, including both Pivotal and Docker Inc.

Pivotal's core platform is based on CloudFoundry, though the company has recently also provided limited Kubernetes capabilities as well.

"We are 650 plus customers on OpenShift, and we added several hundred customers this year." Whitehurst said. "I think that if you look in their (IPO) filling, they added 44 net customers year-over-year; we added several hundred. We are growing faster than they are."

OpenShift makes use of Docker-based containers today and manages them with the Kubernetes container orchestration platform. Docker Inc provides a commercially supported Enterprise edition that provides organizations with a variety of capabilities.

"Docker is doing different things; it has now adopted Kubernetes as its approach to orchestrating Docker containers," Whitehurst said. "We certainly also orchestrate the Docker-formatted containers, but I think we're more open to other types of container formats."

According to Whitehurst, Red Hat doesn't see Docker Inc in many of the deals it is involved in.

"I think they're (Docker Inc) a little more developer focused at this point," Whitehurst said. "So I feel really good about our position across a container platform, and obviously our position in Kubernetes has put us I think in a far lead over anyone else."

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

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