Why Red Hat Is Bullish on Containers

by Sean Michael Kerner

Red Hat reports third quarter revenue of $748 million as interest in container technologies is set to explode in 2018.

Red Hat CEO Jim Whitehurst is very optimistic about the future of containers, as organizations of all sizes move to the new approach for application deployment and delivery. Whitehurst was repeatedly asked by financial analysts during Red Hat's third quarter fiscal 2018 earnings call about the opportunity for containers, and he was consistently bullish.

Red Hat reported its third quarter earnings on Dec. 19, with revenue coming in at $748 million, for a 22 percent year-over-year gain. Net income for the quarter was reported at $101 million, up from $68 million for the third quarter of fiscal 2017.

Looking forward, Red Hat provided fourth quarter guidance for revenue to be in the range of $758 million to $763 million, which would roughly be a 21 percent year-over-year gain.

"Virtually every major company that we are working with is building a strategy around containers," Whitehurst said during the earnings call.

While companies have plans to move to containers, it's a process that will take time. Whitehurst said Red Hat's view is that the majority of applications will be containerized and run that way in the long run. He did note however that even among Red Hat's most advanced OpenShift customers, only 10 percent or less of their total application portfolio has been containerized to date.

Whitehurst said the economic benefit for organizations is that it's cheaper to develop and more efficient to run applications on containers.

"It’s the best of both worlds, which is why it does continue to be the biggest trend in technology right now, certainly in the infrastructure space," he said.

Containers Are Linux

While there are multiple vendors that offer container-based solutions, Whitehurst emphasized Red Hat has a particular advantage over most of its competitors.

"Let’s be clear, containers are a different way to distribute the Linux operating system, which basically decouples the stuff that touches the hardware, so the host space from the user space," Whitehurst said.  "I know there are Windows containers, but that's very much a small edge case."

Kubernetes and Red Hat OpenShift

Red Hat's OpenShift container platform is essentially a distribution of the Kubernetes container orchestration system. Whitehurst commented that many people see Kubernetes as a  kind of Linux equivalent. He noted Red Hat is well positioned in the Kubernetes market and is the
second largest contributor to the Kubernetes project, behind Google.

Pivotal recently announced its Pivotal Container Service (PKS) release thawt includes full support for Kubernetes, which in Whitehurst's view is further validation for the Kubernetes market demand.

Whitehurst feels this is a net positive for Red Hat in terms of differentiation, since it is competing on a combination of Linux and Kubernetes, which is what a container platform is.

"We feel very confident kind of competing in that environment," Whitehurst said. "PKS, I am not even sure what flavor of Linux is underneath that, but certainly nothing that has the lifecycle and all the other components that RHEL (Red Hat Enterprise Linux) has."

Security Implications for Containerized Applications

Whitehurst is also bullish on Red Hat's container story because of the security implications.

"If you are going to deploy an application that you plan to run in a production context, you need to make sure you have a vendor who you feel confident can support and patch the operating system components that are inside the container," Whitehurst said.

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

This article was originally published on Wednesday Dec 20th 2017
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