We are a global leader in providing open source software solutions to the enterprise,
including our core enterprise operating system platform, Red Hat Enterprise
Linux, our enterprise middleware platform, JBoss Enterprise Middleware, our
virtualization solutions and other Red Hat enterprise technologies. We employ
an open source software development and licensing model that uses the collaborative
input of an international community of contributors to develop and enhance software.
We actively participate in this community-oriented development process, often
in a leadership role, and leverage it to create our Red Hat- and JBoss-branded
enterprise technologies.
We believe the open source development and licensing models offer advantages
over the proprietary software development and licensing models both for Red
Hat and our customers. Through the open source development model, we leverage
the community of developers and users, whose collective resources and knowledge
supplement the developers we employ. As a result, we believe we are able to
offer functionality enhancements and upgrades more quickly and with less development
cost than is typical of many proprietary software vendors. In turn, our customers
are able to take advantage of the quality and value of open source software,
which we help develop, aggregate, integrate, test, certify, deliver, maintain
and support for their enterprise use.
The collectively developed software is distributed under open source licenses,
such as the GNU General Public License and GNU Lesser General Public License,
permitting access to the human-readable software source code. These licenses
also provide relatively broad rights for licensees to use, modify and distribute
open source software. These broad rights afford significant latitude for our
customers to inspect, suggest changes, customize or enhance the software if
they so choose.
Red Hat’s participation in the community-driven development process is
illustrated by Red Hat’s sponsorship role in the Fedora Project and the
JBoss.org communities. This participation enables us to leverage the efforts
of these international communities, which we believe allows us to reduce both
cost and development time and lower the risk of including products and features
in our technologies that the market and the community will not accept and support.
Thus, we are able to use the Fedora Project and the JBoss.org communities as
proving grounds and virtual laboratories for new technology that we can draw
upon for inclusion in our enterprise technologies. Additionally, the open and
transparent nature of these projects provides our customers and potential customers
with access and insights to the direction of these projects.
We offer a choice of operating systems and virtualization options for servers,
work stations and desktops that support multiple application areas, including
the data center, edge-of-the-network applications, information technology infrastructure
(applications such as database, ERP and large web servers), corporate desktop
and technical/developer workstation. Our current version of Red Hat Enterprise
Linux includes integrated virtualization.
JBoss Enterprise Middleware delivers a range of middleware products for developing,
integrating, deploying and managing distributed composite and web-based applications.
JBoss Enterprise Middleware is based on the Java programming language that enables
the deployment of service-oriented architectures. JBoss Enterprise Middleware
provides an application infrastructure for building and deploying distributed
applications that are accessible via the Internet, corporate intranets, extranets
and virtual private networks. Examples of applications deployed on JBoss Enterprise
Middleware include hotel and airline reservations, online banking, credit card
processing, securities trading, healthcare systems, customer and partner portals,
retail and point-of-sale systems and telecommunications network infrastructure.
Our integrated content distribution services, Red Hat Network (“RHN”)
and JBoss Customer Support Portal (“JBoss CSP”), permit these Red
Hat enterprise technologies to be updated and configured, while our management
offerings, Red Hat Network Satellite (“RHN Satellite”) and JBoss
Operations Network (“JBoss ON”), permit these and other technologies
to be provisioned, updated, monitored and managed in an automated fashion. Our
suite of training and other professional service offerings also enable enterprise
customers to leverage the performance and scalability benefits of our enterprise
technologies in their environments.
We also provide other infrastructure enterprise technologies, including software
development tools, higher availability clustering of systems and services, and
directory services.
We intend to continue to expand capabilities available under our open source
architecture to help meet the performance, security, reliability and scalability
requirements critical to the enterprise. In March 2008, we expanded our service
offerings through the acquisition of Amentra, Inc. (“Amentra”),
a leading provider of application integration and middleware consulting services.
With the acquisition in September 2008 of Qumranet, Inc. (“Qumranet”),
a company that produces and sells virtualization technologies, we expanded our
server and desktop virtualization and virtualization management capabilities.
In addition to our development and licensing models, we believe that our business
model differentiates Red Hat from many software companies. We provide Red Hat
enterprise technologies under annual or multi-year subscriptions. Through the
life of a subscription, a customer is entitled to specified levels of support
as well as security updates, bug fixes, functionality enhancements and upgrades
to the technology, when and if available, via our integrated management technologies
(i.e., RHN and, JBoss CSP), generally without additional charges. This business
model allows the customer to access consistent improvements to and innovations
in our technologies and the services it needs for the duration that it needs
them.
We sell subscriptions to Red Hat enterprise technologies through both direct
and indirect channels of distribution. We sell directly to customers through
our sales force and our web store. Our indirect sales channel includes distributors,
systems integrators, resellers, telecom/network technology companies, and independent
software vendors (“ISVs”). In addition, leading global server and
workstation hardware vendors support and pre-load Red Hat enterprise technologies
on various servers and workstations and also sell their hardware together with
Red Hat Enterprise Linux as part of pre-configured solutions. Red Hat Enterprise
Linux and JBoss Enterprise Middleware technologies also have gained widespread
support from many of the leading ISVs and independent hardware vendors (“IHVs”).
With the support and tools we make available, many of these companies have engineered
and certified that their offerings run on or with Red Hat Enterprise Linux and
JBoss Enterprise Middleware technologies or, in the case of some ISVs, have
built their products using JBoss Enterprise Middleware. We believe widespread
support from these companies helps market acceptance and adoption of our enterprise
technologies.
COMPETITION
In the operating systems market, we compete with a number of large and well-established
companies that have significantly greater financial resources, larger development
staffs and more extensive marketing and distribution capabilities. These competitors
include Microsoft, Novell, Sun and Oracle, all of which offer hardware-independent,
multi-user operating systems and various virtualization software for Intel platforms
that compete with Red Hat offerings. Moreover, HP, Unisys Corporation, IBM and
Sun each offer the UNIX operating system. Many of these competitors bundle competitive
operating systems, such as UNIX, with their own hardware offerings, thereby
making it more difficult for us to penetrate their customer bases. Moreover,
Sun also provides their Solaris UNIX software under an open source license,
now called Open Solaris. In addition, with virtualization emerging as an important
element of the operating environment, virtualization software companies like
VMware, Microsoft and Citrix Systems, Inc. are also competitors to Red Hat.
No assurance can be given that our efforts to compete effectively will be sufficient.