Asia to power Red Hat growth, says its Asean chief
By Edwin Yapp May 24, 2016
- Legacy system upgrades and open source development to fuel growth
- Malaysian office doubles headcount, working on customer references
OPEN source vendor Red Hat Inc is confident that it will grow even further in 2016 thanks to opportunities within Asia, according to its regional chief.
Speaking at a media briefing recently, Red Hat Asean vice president and general manager Damien Wong said the company has the “same positive expectations” in its current fiscal year as it did in the previous year.
“We are very optimistic that growth will continue unabated,” he said. “We will continue to invest not only in our resources but in our partner ecosystem, and will also roll out customer success stories.”
Founded in 1993, the Raleigh, North Carolina-based company provides and customises open source software for enterprises.
Red Hat broadly divides its business into two: Its infrastructure business, which mainly comprises its Red Hat Linux operating system (OS) offering; and its cloud, applications and emerging technology business, which includes all middleware and cloud computing software and services.
Wong said Red Hat has been enjoying 56 consecutive quarters of revenue growth, which led to its first fiscal year of crossing the US$2-billion total revenue mark.
Its full fiscal year subscription revenue from infrastructure-related offerings was US$1.48 billion, an increase of 12%, or 18% measured in constant currency, he added.
Constant currency is a measurement that eliminates the effects of exchange rate fluctuations and is used when calculating financial performance numbers.
For the full fiscal year, revenue from application development-related and other emerging technologies offerings was US$323 million, an increase of 37% year-over-year and 46% measured in constant currency.
Wong said the figures show that Red Hat’s core infrastructure Linux OS traditional business is growing at a double-digit pace, and its new emerging business also “has critical mass” and is a substantial revenue generator for the company today.
“All our financial metrics show positive: Revenue, operating cash flow, and non-GAAP (generally accepted accounting principles) operating income is on the uptrend,” he declared.
“You can be confident that Red Hat is a financially strong company and that we’re not only growing fast, but we are profitable and cash-flow [positive],” he added.
When asked why he was so confident and why he thinks Asia would contribute further to Red Hat’s profitability, Wong said one of the reasons is that this region, compared to the more developed countries in the West, has more legacy systems – including Unix and mainframe installations – that need to be modernised.
“We see Asia as one of the key areas that we can help move towards this direction, especially with our Linux/ x86-based systems.
“In the application and emerging technology space, where we have our [JBoss] middleware, OpenStack [cloud], and software-defined storage offering, there is some level of commoditisation as companies have realised that they can deploy their applications on open source.
“This is a source of growth for us,” he said.
“The other area of growth is in … being agile and innovative, where enterprises need to use cloud-ready software to scale their business, and this is where our OpenStack cloud solutions have brought gains for us,” he added.
Meanwhile, newly-appointed Red Hat Malaysia country manager Kok Hon-Loong (aka H.L. Kok) said that in Malaysia, he and his team are beginning to see more companies use alternative platforms to help them to drive new business initiatives.
This especially so in the financial services industry (FSI), and the telco and public sector verticals. In doing so, these companies are starting to engage with Red Hat more than ever, he said.
“More ISVs (independent software vendors) and developers are realising it’s better to leverage on open source to develop new solutions, and we are responding to this,” said Kok.
In the past 10 years, Red Hat in Malaysia operated only as a branch subsidiary of Red Hat Asia Pacific Pte Ltd, based in Singapore.
However, last year it incorporated a Malaysian office with David Yap leading its operations. Yap was recently promoted to other regional roles within Red Hat Asia Pacific, and Kok replaced him in January.
Asked how the business has been doing in Malaysia thus far, Kok declined to reveal any details, adding only that Red Hat Malaysia has “doubled its headcount” since opening its office last year.
To date, Red Hat Malaysia has only revealed some dated customer wins including its collaboration with YTL Communications via the latter’s 1BestariNet project, and its Melaka State government initiative.
Pressed further as to how Red Hat has performed in Malaysia with respect to more recent customer wins, Wong said, “One of the things we have not done as much is to go out there and tell the story.
“It does not mean that we have not done anything, but it just means that we have not spent enough effort to get our customers to share.
“Hopefully, in our next briefing we will have a couple more customer case studies to share,” he declared.
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