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For all the hoopla around Microsoft releasing Windows 7 last quarter, it's Linux vendor Red Hat that's stealing Mr. Softy's thunder now.
One might think that the sequel to Vista hitting store shelves -- not to mention spendthrift IT directors -- would cut into the competition's sales. I guess we'll have to ask Apple about Mac sales in a few weeks, then, because enterprise Linux sales have not suffered at all.
Powered by a 21% increase in subscription revenue, Red Hat's third-quarter sales soared to $194 million, 18% above the year-ago period. Renewable subscription contracts now make up 85% of Red Hat's sales, and that steady revenue ain't going away. For seven quarters in a row, Red Hat has renewed every one of the top 25 contracts up for renewal in each period -- for 20% more money than the old agreement, on average. That's particularly impressive when you consider that this span includes the bloodcurdling business free-fall of 2008.
Red Hat is not content to rest on its laurels. Management recognizes that virtual computing is a game-changing technology, and now offers a virtualization platform of its own. Red Hat Enterprise Virtualization is a fast and powerful virtual server platform built around virtualization features in recent chips from Advanced Micro Devices and Intel.
This product competes directly with established leaders like VMware, Microsoft, and Citrix Systems. Despite the heavy competition, Red Hat reports good traction with its existing customers and hopes to make RHEV a significant revenue generator in coming years and quarters. It's a bold step into a market that fueled VMware's $1.9 billion of 2008 sales, and the Red Hat name holds serious weight in IT circles.