The VAR Guy thought Red Hat Exchange — an online store the software company launched last year — would be an overnight hit. It wasn’t. But after some tinkering, Red Hat Exchange (RHX) seems to be taking off — and giving partners like MySQL and Zimbra a lift as well. In fact, the site’s bookings doubled in Red Hat’s most recent quarter, The VAR Guy has learned. Here’s how Red Hat got RHX on track.
First, The VAR Guy must admit he was a little confused. Red Hat CEO Jim Whitehurst, in a July 2008 interview with CNET, had this exchange with a CNet reporter:
Question: So will you be sticking with the for your attempt to monetize higher-level software?
Whitehurst: Yes. I want to be clear. On the exchange, I’m frankly not a big fan. We really have de-emphasized the actual exchange. The actual Red Hat Exchange program is extremely important because I do think we add a lot of value (at lower levels), but as customers want more solutions, we need to be working to ensure we have certified stack solutions–either appliances or certified stacks. So our RHX partnerships are extremely important there.
Bad News Or Good News?
Um, so what exactly did Whitehurst mean by those comments? How can you “de-emphasize” the actual exchange while building the site at the same time? The VAR Guy reached out to Red Hat for answers, and got this statement from a spokeswoman:
When we launched in May 2007, we expected small and medium businesses to embrace the online store for its virtues of simplifying the offerings, providing ratings and reviews, and making pricing transparent. We quickly found that the interest for the marketplace RHX was providing came from larger enterprise customers, for which the online virtues didn’t resonate. So, as Jim has mentioned, the e-commerce aspect of RHX has been de-emphasized, but RHX itself has been emphasized…”
Sales Are Taking Off — And Lifting MySQL and Zimbra
Hmmm. At first, that sounded like positive spin from Red Hat. But Red Hat offered up some proof RHX is taking off. Consider these rather impressive milestones:
- RHX’s bookings in Red Hat’s most recent quarter doubled from the previous quarter. RHX’s average growth quarter over quarter over the last three quarters is about 38%. Noted the Red Hat spokesperson: “This surprised us as we expected a slower growth ramp due to the sales cycle of these types of products.”
- Customer wins include:
- One of the nation’s largest non-profit medical research organizations purchased 3-year subscriptions in the upper six-figures for Red Hat Enterprise Linux, JBoss and Alfresco Document Management and Web Content Management for a corporate intranet solution.
- A global provider of business information solutions has made multiple purchases of MySQL Enterprise for scaling out its information infrastructure.
- A media holdings company in the U.S. has purchased thousands of Zimbra mailboxes for its regional offices.
- International demand is rising — particularly in Latin America and the APAC (Asia and Pacific) markets. For example, Red Hat says, the company has had “significant discussions with a government agency in South America for more than 20,000 Zimbra mailboxes and we fully expect this to lead to additional sales (government and otherwise) in the region.”
So, where does Red Hat Exchange go from here?
According to the Red Hat statement:
“We are selectively adding partners as we evaluate the open source landscape for rising stars, but are only “doubling down” on those that show clear market traction. And we will draw upon our pool of active and potential candidate ISVs as we continue to broaden our solution set.”
The VAR Guy will be watching.
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Tags: MySQL | online software sales | Open Source | Red Hat Exchange | RHX | Zimbra
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You’ve connected the dots correctly, Monsieur le Mec de VAR.
RHX has an automated exchange never really took off, but it has been an excellent launchpad for Alfresco (and others – I know Zimbra has had success with the program) to work with Red Hat and reach mutual customers. Our business with Red Hat through RHX has grown every quarter, and we expect another strong quarter.
No, it’s not an SMB paradise. But it’s a great way for companies like mine to work with Red Hat. Prior to RHX, we had no idea how to work with Red Hat and, as its employees will tell you, Red Hat didn’t know how to work with us, either. This is much better.
Matt: Always good to see you on the open road — even if it means you’re working weekends. Sorry The VAR Guy overlooked Alfresco as a key partner within the RHX platform.