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Google Docs creates expectations CIOs can't meet, Red Hat CEO says

Red Hat CEO Jim Whitehurst says software business model is 'fundamentally broken'

By , Network World
June 23, 2010 02:21 PM ET

Network World - As chief executive of Red Hat, Jim Whitehurst spends much of his time traveling the world and talking to CIOs, and he constantly hears one thing: that they are "under siege" by user expectations.

People's richest IT experiences these days happen at home, with Google, Facebook, Twitter, iTunes and the like, Whitehurst said in his keynote address Wednesday at the Red Hat Summit in Boston. In the workplace, IT budgets are rising but actual services are improving incrementally at best, he said.

"I talked to one CIO who said, 'look, my biggest competitor is Google,'" Whitehurst said.

Red Hat's CEO: Clouds can become the mother of all lock-ins

The unnamed CIO works for what Whitehurst described as a "big industrial logistics company." A few months ago the CIO was asked by the chief marketing officer to provide a way for marketing employees around the world to share and build documents together, and perform other collaborative tasks.

The CIO discussed the project with his application development group, then went back to the CMO and said "we can do this, in nine months at a cost of $14 million," according to Whitehurst.

"The CMO says 'what are you talking about? I was describing my daughter's high school science project.' And they were on Google Documents, sharing information, jointly editing documents, and they're doing it for free. This is a true story. I may have been slightly off on the numbers, but a true story."

Whitehurst told the story to illustrate a larger point, that he believes the software business model used by Red Hat's non-open source competitors is "fundamentally broken."

Software gets slower even as hardware becomes faster, because vendors like Microsoft and Oracle spend their time packing in new features that are useful to only a small subset of end users, and then force customers to upgrade, Whitehurst contended.

"How many times have you been forced to upgrade a piece of software you're using when you didn't want the functionality, but you were forced to do it because the vendor was stopping support of the current version," Whitehurst said. "This doesn't mean software companies are bad. This is an outcome of an old business model that is fundamentally broken. If you sell features, you're going to build features and you're going to build features whether your customers need them or want them."

That's not to say Red Hat doesn't build features. At the conference Red Hat announced availability of the first version of its "Cloud Foundations" package, which it says helps customers build private clouds by combining Red Hat's Linux, virtualization software, grid functionality, systems management and middleware with a reference architecture and consulting services. Red Hat also released the first version of Enterprise Virtualization for Desktops and the 2.2 version of its server virtualization software.

But Whitehurst says in eight years Red Hat has never raised the maintenance subscription price for Red Hat Enterprise Linux support, and "We don't bloat our software because we don't make money on a new release. If you're a subscriber you get it. We don't generate incremental dollars with new releases."

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