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Red Hat OpenStack Gains Momentum Despite Gov’t Challenges

IBM President Jim Whitehurst Resigns
Jim Whitehurst

Red Hat (RHT) continues to see growing momentum for its OpenStack, OpenShift, CloudForms and storage technologies. But business in the U.S. government sector --at least in Red Hat's most recent quarter -- appears slower than the company had hoped.

Within Red Hat's top 30 deals in the most recent quarter, seven included the Red Hat OpenStack platform, five included OpenShift and five included storage, according to CEO Jim Whitehurst. Several of the OpenStack deals were for more than $1 million. "Also of note, we closed our second OpenShift deal over $10 million and another OpenShift deal over $5 million," Whitehurst said.

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Red Hat grew up promoting Linux, but the company's push into OpenStack (open source cloud software); OpenShift (platform as a service with container support); CloudForms (infrastructure as a service) and other technologies has been accelerating.

The OpenStack momentum is particularly impressive, considering rival OpenStack providers like Rackspace and Mirantis have had to pivot in recent months. Rackspace now leans heavily on managed services for Amazon Web Services and Microsoft Azure. Mirantis has introduced a range of consulting services.

Red Hat Government Challenges

Despite Red Hat's progress, some sizable November deals in the U.S. Federal space have taken longer than initially expected to close, though Red Hat expects them to ultimately move forward in the current quarter, Whitehurst said.

For its Q3 2017 results (announced Dec. 21, 2016), Red Hat's total revenue was $615 million, up 18 percent vs. the corresponding quarter last year. Revenues were roughly $3 million below Wall Street's expectations, and company shares therefore fell following the revenue shortfall.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.