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Red Hat CEO deaf to VMware's giant sucking sound

They make how much money?

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Summit Red Hat's CEO Matt Szulik bombed us into a state of confusion today with some curious statements around the server virtualization market.

First off, Szulik admitted to keeping a not so watchful eye on server virtualization leader VMware. During an interview session with reporters, we pointed out that VMware brings in more money these days than Red Hat. For example, VMware reported $704m in revenue during its last fiscal year versus just $401m for Red Hat. VMware grew revenue at almost 100 per cent year-over-year, while Red Hat grew revenue 44 per cent.

"I have never heard that statistic before that they are making more money (than we are)," Szulik said.

Such a comment caught us by surprise since VMware has been making more money than Red Hat per quarter for quite some time and since the two companies have such close ties. After all, VMware makes most of its money by allowing customers to run more than one copy of Red Hat per physical server. Apparently, that's a much healthier business to be in that actually producing and servicing the Red Hat operating system.

Despite keeping only a wandering eye on VMware, Szulik felt secure enough to warn that Red Hat is very focused on the server virtualization market.

"We think it is very early in the game," he said.

The CEO pointed to figures which claim that only seven to eight per cent of companies have started using server virtualization software so far.

This leaves room for Red Hat to concentrate on customers who "want to move entire workloads" instead of mimicking VMware's "box-by-box" virtualization strategy. While not specific, Szulik seemed to hint that Red Hat will produce software for sending out and managing applications across large numbers of servers.

A number of start-ups do this today and, in fact, so does VMware to an extent. And we're still not clear if Red Hat plans to develop such software internally or if it will rely on partners like XenSource to do the dirty work. Heck, it might even acquire a smaller player, although Szulik dodged our question on that front.

Szulik, however, didn't shy from some database questions.

He delivered a flat "no" when asked if Red Hat and Oracle have discussed a possible acquisition in the last 6 months. Szulik instead suggested that reporters should spend less time worrying about Oracle's effect on Red Hat's business and more time wondering what Red Hat might do to Oracle's database business. ®

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