Red Hat CEO: Money crisis will boost open source

By Alex Serpo ZDNet Australia
Posted on ZDNet News: Oct 16, 2008 7:31:36 AM

Whitehurst, who was in Australia as part of a tour of the Asia-Pacific region, said in an interview with ZDNet.com.au on Wednesday that the crisis would cause companies to consolidate their technology infrastructure and reduce spending.

"So the bad news is when things get tight, people stop investing as much in the future," he said. "I would expect to see a slowdown in spending for new functionality." However, the chief executive said this would cause more companies to consider open-source software as an option.

"What I do know is that open source will be in much better shape coming out of [the financial crisis], that going into it relative to our propriety competitors," he said.

Whitehurst said that this was because open-source software provided a better economic model for creating software. However, Kevin McIsaac, a Sydney-based analyst for Intelligent Business Research Services, said he did not expect this to increase the market share of companies such as Red Hat.

"Do I think the financial climate will drive people towards Red Hat? Not in any great way," he said. "Do I think a deteriorating economic environment is good for open source? Probably [there will be] no great impact."

This was because enterprise level open-source software presented significant costs.

"A lot of my customers who I have spoken to, have said that the support costs are really quite high... a few people have commented on is how much cheaper Oracle support for Red Hat Linux was, than Red Hat itself," McIsaac said.

McIssac suggested alternative ways of cutting costs: "One of the ways to cut your costs is simply to go and audit your licenses and get rid of the ones you don't need."

He also warned IT managers to expect budget cuts. "The CFO will be coming into the CIO's office and saying, 'We need to find a way to cut costs'; smart CIOs will already have a plan in their top drawer."