Red Hat Seeks Growth Through Partners

Going direct might have worked for Dell, yet for Red Hat, it's all about the channel.

By Sean Michael Kerner | Posted Aug 18, 2009
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In many ways, Linux cuts out the middleman by enabling users to get at the source code and freely download an operating system.

Yet for Linux vendor Red Hat, the middleman -- in the form of partner relationships -- is a key foundation for financial success.

Red Hat is now expanding its partner program with a new premier partner level as well as specialization programs for virtualization, JBoss middleware and Red Hat Enterprise Linux infrastructure technologies.

The new program comes at critical time for Red Hat as it tries to continue to crow its positive financial momentum amid challenging economic conditions.

"Channel contribution to Red Hat's revenue typically runs in the 50 to 60 percent range globally, with this past quarter (Q1 FY10) coming in at around 60 percent," Roger Egan, vice president for Red Hat's North American channel sales, told InternetNews.com. "Yes, we are trying to get that number to 60 percent to 70 percent consistently."

Key concerns with any expanded partner effort is how it might affect Red Hat's profit margins -- whether they are higher or lower than when it sells direct. But while Egan didn't go into specifics, he said that the arrangement would work out neatly for Red Hat.

"We believe this to be very beneficial to our sales model, and that it will drive additional revenues by focusing on net new business for the company," Egan said.

Read the rest at InternetNews.com.

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