Part of Red Hat's strategic positioning is around the emerging cloud marketplace where Red Hat Enterprise Linux can serve as the underlying operating system. Among the key initiatives highlighted by Whitehurst were several sizable customer wins including a large private cloud implementation project with a major movie studio. Whitehurst did not name the specific movie studio during the call.

He did name Japanese telecom giant NTT as a win, describing plans for NTT to use Red Hat for its new public cloud offering.

Whitehurst also revealed that Red Hat Enterprise Linux is being used by the Obama Administration's WhiteHouse.gov Web site, which also recently moved to the Drupal open source content management system.

Red Hat's CFO Charlie Peters added during the call that one of Red Hat's top 30 deals during the quarter was with a large financial services firm that is migrating from Microsoft Windows to Red Hat Enterprise Linux. Peters did not reveal the name of the customer.

While the company is making inroads against Microsoft (NASDAQ: MSFT), Whitehurst still sees Red Hat's biggest growth coming from the UNIX-to-Linux migration customers.

"I'll certainly say we are seeing more progress against Windows than we were a year ago," Whitehurst said. "I think as people get more comfortable with the product and we get a chance to demonstrate that broader value proposition, certainly it's an increasing mix of Windows [customer wins], but still that would be in the minority of business."

Microsoft itself is indirectly targeting Red Hat users by way of its partnership with Novell. Microsoft and Novell now offer Red Hat migration support offering through which Red Hat subscribers can get Linux support from Novell.

One potential free-to-paid opportunity for Red Hat exists in instances where Red Hat Enterprise Linux is being used but not paid for with a subscription -- possibly situations in which not every user is properly licensed.

Another area of future growth for Red Hat could come by way of converting more free Linux users to paying Linux subscriptions. Peters noted that free-to-paid transitions represented $1.5 million in revenue for Red Hat during its third quarter.

He added that in previous quarters, revenues from free-to-paid wins had been in the $1 million range.

"I'm hopeful that as we continue to sell the value proposition to non-customers today that we continue to move more over from free to pay, but it's very hard to project what that number might be," Peters said.

Sean Michael Kerner is a senior editor at InternetNews.com, covering Linux and open source, application development and networking.

Story courtesy of Internetnews

« Back: Red Hat Defies Expectations Again