It is confirmed: 2014 has been a great year for Red Hat. Yesterday, we announced third quarter results of our fiscal year 2015 and, with that, celebrated our 51st consecutive quarter of revenue growth - more than 12 years of consecutive revenue growth. Thank you to the team of Red Hat customers, partners, open source contributors, and associates around the world, for helping us propel Red Hat to new heights. While 2014 has been a fantastic year for Red Hat, it has also been a banner year for open source.
Today, it is almost impossible to name a major player in IT that has not embraced open source. Only a few short years ago, many would have argued we would never see that day. Many of us remember the now infamous “Halloween Documents,” the classic quote from former Microsoft CEO Steve Ballmer describing Linux as a “cancer,” and comments made by former Microsoft CEO Bill Gates, saying, “So certainly we think of [Linux] as a competitor in the student and hobbyist market. But I really do not think in the commercial market, we'll see it [compete with Windows] in any significant way.”
This year, Microsoft CEO Satya Nadella's public statement, "Microsoft loves Linux", was a huge milestone for open source. I applaud Microsoft – and others – for recognizing the undeniable force of community-powered innovation.
For years, we tackled questions: "Is open source safe?" "Is it secure?" "Is it reliable?" Open source solutions are all of those things and more. They are widely embraced by the enterprise; Red Hat alone counts more than 90% of the Fortune 500 as our customers. Today, with virtually every major technology company adopting or embracing open source, I am not hearing those same questions at the CEO and CIO level.
Open source was initially adopted for low cost and lack of vendor lock-in, but customers have found that it also results in better innovation and more flexibility. Now it is pervasive, and it is challenging proprietary incumbents across technology categories. It is not only mainstream, open source is truly leading innovation in areas like cloud, mobile, big data, the Internet of Things, and beyond.
As we embark on a new year, I cannot help but reflect on the speed with which technology is changing. Rapidly delivering technology is about much more than just the technology – it is about people and culture. Customers now call on Red Hat to help them not only handle the current wave of technology, but to also help guide them through their organizational and cultural IT transformations. We embrace that role.
More than ever, this is why executives are looking at key technology companies – including Red Hat – as their partner instead of as a vendor. I am proud that we have earned that ‘trusted advisor’ status.
For example, during a recent trip to Europe, CIOs I met with did not want to talk specifically about technology or open source, they increasingly wanted to talk about DevOps and culture. While the technology remains important, these executives realize that to deliver functionality quickly, they must change how they operate. Conversations around OpenShift naturally flowed to questions like “Should I have my developers and operations people in separate groups, or should I co-locate them?" and "Do I need to have them report to the same person?"
Looking forward, I am almost afraid to predict what we will see in 2015. Last year, I said 2014 would be a big year for cloud, mobile, and big data adoption, and it was. However, I am not sure any of us expected the speed of adoption we have seen, and I cannot see the acceleration slowing down – I only see the pace picking up.
Think, for example, of how fast OpenStack interest and adoption has grown. I recently read research from 451 Research projecting the OpenStack market to be $1.7 billion by 2016, and $3.3 billion by 2018. That is quadruple its market size from earlier this year. On recent customer visits in China and India, I was excited by the number of companies evaluating OpenStack. One customer at a large banking institution told me that they plan to build their core banking system on OpenStack. Stories like that are becoming increasingly common. OpenStack is well poised as the future of cloud computing, and I am proud of Red Hat’s leadership role in shaping that future – both in the community and enterprise.
OpenStack is emerging as the defacto open source cloud infrastructure technology, just as Linux became for the operating system. I see interest in OpenStack as a direct reflection of the deep dissatisfaction with the state of traditional IT and traditional IT infrastructure. It is no longer sufficient for CIOs to rely solely on proprietary environments. Demands of this new era call for a more open and flexible environment, especially as IT departments feel the pressure to deliver the capability and functionality needed by their businesses.
Globally, more and more CIOs are moving to these open, flexible environments. I recently visited South Korea – historically considered among the most conservative markets in terms of open source adoption - and was excited by the number of companies actively migrating from UNIX to Linux. In fact, the size of the open source community in South Korea is more significant than I had previously appreciated. While there, I hosted a dinner with several hundred attendees, many of whom were active contributors to OpenStack and other major open source projects. To see transformation like that, in even the most conservative of markets, is powerful.
Beyond OpenStack, it has been fascinating to watch the momentum and interest from enterprises around Linux containers. Container technology has the potential to greatly speed the development and deployment of applications, as well as substantially ease the operational management of an application portfolio. When you take barriers away from developers being able to build and deploy, you are going to get more applications being built and deployed. It's a great thing for both developers and operations. The possibilities around containers appear to be almost limitless.
From our upstream efforts around projects like Docker, Kubernetes and Project Atomic to enabling enterprise adoption with OpenShift, Red Hat Enterprise Linux Atomic Host, and Red Hat Enterprise Linux, Red Hat has emerged as an early leader in this space. You can expect our efforts and leadership around containers to continue in the new year.
As we move to 2015, I expect all of the transformations I described above to continue. The rate of adoption and advancement will continue to amaze us all. IT organizations will continue their cultural and operational transformations to embrace the new style of fast, frictionless IT. Open source will continue to raise the bar, and so will Red Hat.
I am excited about facing these challenges and opportunities with our customers and partners, and continuing to do what we can to deliver technology solutions that help to better and change the world.
Cheers to 2014, and here is to a prosperous 2015!