Linux veteran Red Hat (NYSE:RHT) is making some interesting fashion choices right now. To go with that scarlet fedora, the company is lacing up a pair of high-tech running shoes. These guys are about to go places.
Granted, it takes a few quarters to gear up for this run, and the long-distance sprint might not really start until next year. But I can see Red Hat setting itself up to benefit from the ubiquitous virtualization trend, even as Linux itself goes from strength to strength in the enterprise computing space. It's a killer combination, and the boys from Raleigh know it.
Over the last couple of quarters, Red Hat has focused on scaling up its operations in anticipation of a major boost in order volume. The sales and marketing force has been upgraded, the research-and-development budget increases by a couple of million with every passing quarter, and capital spending has been kicked up a notch to build out the company's worldwide IT infrastructure.
As for virtual machines, Red Hat's latest Enterprise platform supports several flavors out of the box, including market-leading VMware (NYSE:VMW) and a couple of community-supported open-source alternatives. The default configuration, however, is the Xen architecture -- born as an open-source project, about to be acquired by Citrix Systems (NASDAQ:CTXS), and claimed to beat VMware's performance in certain configurations.
It also helps to have a strong road crew, which Red Hat certainly does. Its channel distributors and strategic partners include luminaries like chip giant Intel (NASDAQ:INTC), Big Blue IBM (NYSE:IBM), storage specialist EMC (NYSE:EMC), and system builder Sun Microsystems (NASDAQ:JAVA).
Coasting along on these guys' coattails, Red Hat expects to drive about 60% of its sales through them. Today, that share stands at 53%, and Red Hat is about to present an integrated partner portal site that will let channel partners "self-authorize, license and very shortly self-certify applications online with no human involvement," according to CEO Matt Szulik. It's easy! It's fast! That shortens and simplifies the order process, and it should encourage the partners to push through higher sales volumes.
Go get your sneakers. The race to the top is about to start.
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