Red Hat distributes open source enterprise software and offers subscription, support, services and training. Red Hat is the world’s leading open source provider of enterprise infrastructure software.

History
In 1993 Bob Young founded ACC Corp., a company that sold Linux and UNIX software accessories. In 1994, Marc Ewing started a Linux distribution, named Red Hat Linux. In 1995, Young bought Red Hat Linux and merged the two companies into Red Hat Software, of which he became CEO. Red Hat went public in 1999 (NYSE: RHT), experiencing spectacular stock rises during the internet bubble and even larger declines after the burst.
Matthew Szulik succeeded Bob Young as CEO in 1999. After experiencing losses from 1998 to 2003, financial results improved. The company has made profit every year since 2004. Red Hat grew, partly through acquisition of Cygnus Solution (1999), JBoss (2006) and Qumranet (2008). Cygnus provided commercial support for free software. With the JBoss acquisition, Red Hat expanded its product portfolio with middleware outside of Linux. Qumranet offers a virtualization platform for enterprises. Red Hat holds strictly to the open source development model, convinced that it produces better quality software for customers. Red Hat generates revenue through subscriptions and support. Subscription revenue accounts for around 85% of total revenue. The company also generates revenue with training and services.
Red Hat is now the world’s leading open source Linux provider and one of the fastest growing tech companies in the US. The company has over 2,800 employees and 65 offices in 28 countries. Since January 2008, Jim Whitehurst is CEO, with Szulik now functioning as chairman of the board.

Products
Red Hat distributes open source software. Red Hat takes open source software and makes it consumable for enterprises, not offering licensed products, but subscriptions and support.

The main software products of Red Hat are:

Red Hat Enterprise Linux, an open source application platform designed for enterprise computing.
JBoss Enterprise Middleware, which is deployed on various operating systems and used to support a distributed, modular, reusable, and open standards-based service oriented architecture deployment.
Red Hat Developer subscriptions for providing integrated development environments.
Red Hat Cluster Suite which features clustering and uses application fail-over technology.
Red Hat Global File System, a clustered file system designed for commercial and technical computing applications.
Red Hat Certificate System, an authentication system for limiting access to mission critical resources and data.
Red Hat Directory Server, which centralizes application settings, user profiles, group data, policies, and access control information into a network-based registry.

Red Hat also provides systems management solutions, consulting services for IT deployments and support services. Originally distributing Linux, Red Hat has expanded its product portfolio over time, especially with the acquisition of JBoss. The focus is still on enterprise software.

Market and Competitors
The enterprise infrastructure market represents a market of around USD 50 billion. In the operating systems market, Red Hat competes with a number of large and well-established companies that have significantly greater financial resources, larger development staffs and more extensive marketing and distribution capabilities. These competitors include Microsoft, Novell, Sun and Oracle, all of which offer hardware-independent, multi-user operating systems and various virtualization software for Intel platforms that compete with Red Hat offerings.
HP, Unisys Corporation, IBM and Sun each offer the UNIX operating system. Many of these competitors bundle competitive operating systems, such as UNIX, with their own hardware offerings. IBM is market leader on the server market, with HP at a close second place. Both companies have a market share of around 30%, while Sun and Dell both have close to 10% of the market. Sun also provides their Solaris UNIX software under an open source license, called Open Solaris. In general, the UNIX operating system is increasing pushed to the high-end segment, attracting few new users and gradually losing users to Linux.
Within the Linux operating systems, the main competitor has historically been Novell, with its SUSE brand of Linux. Other smaller Linux brands include Mandriva, Debian, Canonical Ubuntu. The barriers to creating a new Linux distribution are relatively low because the open source license governing Linux distributions permits copying, modification and redistribution. In 2006, Oracle began to sell support for its version of the Linux operating system. In July 2009, Google announced its open source operating system Google Chrome, to be introduced at the end of 2010.

In 2006, Microsoft and Novell announced an agreement to collaborate on technology, a cross covenant not to sue the other party’s customers for patent infringement and an agreement by Microsoft to purchase and distribute coupons for SUSE Linux maintenance and support. In 2008, Microsoft purchased additional coupons for SUSE Linux for distribution to customers. The coupons to SUSE Linux distributed by Microsoft have intensified this competition for Red Hat and may create downward pressure on the prices. Novell has won a few percent market share since collaborating with Microsoft.

In the Linux distribution market, mindshare plays an important role. The distributors all have a well running free version of their software. The distributions aim to have as many users as possible, to increase mindshare and development in the open source community.

In the middleware market, Red Hat competes with IBM, Oracle (which acquired BEA in 2008 and Sun in 2009) and Microsoft, all of which offer broad portfolios of enterprise Java and non-Java middleware products. All of these vendors, with the exception of Sun, offer the majority of their middleware products under a typical proprietary software license model. IBM and Sun often bundle hardware and software for their customers.
The middleware market was worth around 10 billion USD in 2007 and will grow to an estimated 16 billion in 2011. With the purchase of JBoss in 2006, Red Hat bought a small, but promising position on this market, which is dominated by IBM and Oracle.

With virtualization emerging as an important element of the operating environment, virtualization software companies like VMWare, Microsoft and Citrix Systems are also competitors to Red Hat. The virtualization market is estimated to be worth 2.3 billion USD. In 2008, Red Hat acquired Qumranet, adding new products and expertise to the portfolio. In this market, VMWare is now market leader and the most important competitor of Red Hat.