Red Hat Seeks Growth Through Partners

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 “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

“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.

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