Red Hat Wants a Piece of China’s “Cloud” Pie

Having crossed the US $1 billion threshold in its 2012 financial year, a first among its open source company peers, Red Hat has set its sights on the $3 billion revenue mark by 2017.



In order to achieve this ambitious target, the company is betting big on China’s cloud market growth. As pointed out by the Red Hat CEO Jim Whitehurst, China offers the greatest market potential when compared to other developed countries like the US. This is because it doesn’t shoulder the burden of having legacy systems. It is from this point of view that the company views China as its next growth frontier.




According to Whitehurst, Red Hat’s future growth prospects can be grouped into two sectors. First, growth in the traditional software segment is expected to peak as more enterprises shift from the Unix-based operating platform to Linux, as well as wide scale adoption of Red Hat storage services.



Secondly, touted to be the key growth area is the expansion of the open hybrid cloud space. The open source hybrid cloud space functions more or less like a data center and offer enterprises unmatched scalability and flexibility.



Backed by a booming cloud computing technology industry and the recent increase in IT spending, China offers a gold mine opportunity for cloud computing firms. Additionally, more and more Chinese are purchasing computer devices, thus making open source technologies to be the next battlefield. It is from this background that one appreciates why many IT giants such as HP, Oracle and IBM are flocking to China.



In order to expand its market in China, Red Hat has been proactive in tackling some of the key obstacles that deter Linux adoption by Chinese enterprises. Some of these include; lack of vendor support, inadequate domestic Linux expertise, and lack of a supported-application stack. It is important to note as of recently most of these barriers have been reduced, especially with the launch of the Chinese-language customer support center.



To prepare itself for the expected boom, Red Hat China is geared for major expansion, hiring of 100 new employees before the year closes. In addition to its newly opened Beijing office, the company is also intending to open more offices in China.



The new staff will be trained and then assigned to the new office stations where they will interact directly with the customers. From a general perspective it is evident that Red Hat means business in China as it is strategically positioning itself to reap huge rewards once cloud computing takes root.