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Red Hat CEO Says Innovation Trumps Cost Savings

Progress Preferable to Penny-Pinching

  • March 17, 2010
  • By David Needle

In a keynote address, Jim Whitehurst explains why open source has become more valuable as an enabler of innovation in the enterprise than a means to cheaper software.

SAN FRANCISCO - The economy may still be in the doldrums, but Red Hat CEO Jim Whitehurst said pitching the cost savings of open source software doesn't necessarily seal the deal with enterprise customers as it once may have.

"Last year I was here talking about the advantages of open source in a down economy," he recalled during his keynote here at the Open Source Business Conference (OSBC). "Open source is driving a lot of innovation in IT, and I would argue that innovation will slow significantly if we don't see further adoption of open source."

Whitehurst said being able to offer lower prices is always a good thing when selling to enterprise CIOs, but with budgets largely fixed he said companies like his can offer more. "What's sold to customers better than saying 'We can save you money' is to show them how we can give you more functionality within your budget. That's a challenge CIOs get," he said.

Speaking more broadly, Whitehurst made a pitch for open source solutions throughout the supply chain, manufacturing and industry and society as a whole. Touching on a topical news story � Toyota's recall woes � he said he believes the company's initial evaluation that its problems are not related to electronic parts failure. Rather, he implied it could be a software problem hidden away behind closed code.

"If the hood in a car was welded shut, we wouldn't trust to buy it, but 100 million lines of code are shut, and we would know a lot more if they were open," he said. Whitehurst cited industry estimates that new cars on average have about 100 million lines of code running various systems, a number forecast to rise to 200 to 300 million lines of code over the next five years.

Whitehurst positioned open source as a great enabler of new technologies and new companies. "Google wouldn't exist without open source," he said, noting the search giant was able to save billions of dollars by running millions of servers in its infrastructure with free Linux software. He said Google is the most successful open source company in the world in terms of returning shareholder value.

But he argued most of the commercial software industry is still relying on "20th century models" in pricing and innovation cycles. He said IT buyers have "beat the crap out of hardware suppliers" to get prices down about as far as they can go the past few year, but software pricing as a percentage of overall system cost remains stubbornly high.

"Software has not followed Moore's Law," said Whitehurst "In the middle of the worst recession, Oracle raised prices last year," he added in a swipe at his software rival.

David Needle is the West Coast bureau chief at InternetNews.com, the news service of Internet.com, the network for technology professionals..

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