Red Hat at the crossroads

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Linux vendor Red Hat is experiencing success and turmoil all at once, as the company, and perhaps the wider open source software industry experiences a period of profound change.

Red Hat has a new chief executive, Jim Whitehurst, who has come from the unlikely background of Delta Airlines. The announcement, made just before Christmas, coincided with another significant rise in Red Hat's revenues, and came amid largely unsubstantiated rumours of discontent among developers in Red Hat's recently acquired JBoss division. Red Hat may be the biggest open source company in the world but it currently faces complex decisions as it chooses between its open source roots and growth in enterprise IT spending.

In some respects Red Hat created the paradigm for the uptake of open source in industry. Red Hat's instantly recognisable moniker and logo are the stuff that marketing people dream of and die for, but rarely achieve. The logo defines the company, and nobody can mistake the company or the man in the Red Hat for anything or anybody else. Red Hat is a brand.

Kleenex and ketchup

Red Hat was founded in 1993 when Mark Ewing and his friends, Donnie Barnes, and Erik Troan, decided that what the world really needed was a GNU/Linux distribution that worked straight from the box. The Linux kernel itself was less than two years old. The name's prosaic origins were explained by Mark Ewing in 1996: "In college I used to wear my grandfather's lacrosse hat, which was red-and-white striped. It was my favourite hat, and I lost it somewhere in Philadelphia in my last year. I named the company to memorialise the hat. Red and White Hat Software wasn't very catchy, so I took a little liberty."

But Red Hat didn't really take off until Bob Young became involved. The company had small beginnings. For the first months and years Young worked "in my wife's sewing closet in Connecticut, and Marc in a spare room in his apartment in Durham (North Carolina)", distributing the brand, free CDs, hats and t-shirts, yet six years later, when Red Hat went public, the company was valued at upwards of $5 billion (£2.5 billion).

As Jon 'maddog' Hall tells it, Bob Young put Red Hat on the map, and would say "I'm building a brand", but nobody listened. "By the time people recognised what he was doing it was too late. He had built the Red Hat brand to the point where a lot of people in the US would say 'Red Hat is Linux, and Linux is Red Hat'. Like Kleenex and tissues, and Heinz and ketchup, Red Hat had become a generic term. Bob Young did an amazing job. He recognised that in building up the company, he needed to bring in some good executives with the right skills to take over when he stepped out of the way... He would say, 'Hey, give away the software, and sell the t-shirts and hats', but what he really meant was: 'Give away the software, and sell the services.' And still people didn't understand."

Red Hat prospered because it stayed close to the ground, identifying closely with the rapidly growing user and developer communities. Unlike SuSE and Caldera, the other "commercial" Linux distributions of the time, Red Hat CDs didn't contain proprietary installers and were always freely downloadable. Every feature developed by Red Hat was distributed under the GPL. During the mid 90s Red Hat won countless awards from PC magazines. The raising of Red Hat's profile and brand meant that, by the time Linux began to take off in commercial environments at the end of the decade, Red Hat was perfectly positioned to take advantage, and become the Linux company - a position that offended many in the Linux community but had been won through application and inspiration.

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