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'Indians can't afford dollar-denominated software'

Leslie D'Monte  |  Mumbai 

James M Whitehurst

With this year’s increased budgets for e-governance, the scope for open source IT implementations in India should be higher, according to James M Whitehurst, Red Hat President & CEO and a member of its Board of Directors.

“We should empower Indians and reduce the digital divide. They cannot afford dollar-denominated software. For PCs to be affordable by every household, the cost of basic software has to reduce or else piracy will only go up,” Whitehurst told Business Standard on his recent visit to India to assess the business here, meet government officials and other open source partners.

He added IT will no longer be the prerogative of the English speaking elite. Red Hat Enterprise Linux, for instance, is available in 11 local languages. Here in India, “we concentrate on four key verticals— the government, Banking, Financial Services and Insurance companies, telecom and education,” Whitehurst added.

India is the third largest contributor to (Red Hat’s consumer operating system). has a significant presence in the government, BFSI and telecom verticals. This is a consequence of the basic needs of security and stability in these verticals which are addressed by Linux, he added.

Globally, Red Hat — which bills itself as the world’s leading open-source solutions provider — is an approximately $525 million (around Rs 2,400 crore) business and has around 2,200 employees.

“But when I look at the quality of our existing technology, the brand we have and the markets we play in, we should be an over $5 billion company. The operating systems and middleware market, for instance, is worth almost $100 billion. We cover a fraction of this business, but are growing at around 30 per cent CAGR,” said Whitehurst.

The business model innovation, noted Whitehurst, is not in making the OS but providing enterprise-capable applications on Linux. Red Hat wants to make enterprise software “implementable and deployable”.

It has a subscription model wherein, customers pay for what they use. The source code is free but customers are charged for service. There are no software upgrades when it comes to Red Hat. Besides, there’s no lock-in and Linux consumes less power which reduces the total cost of ownership (TCO), argued Whitehurst.

Incidentally, last December, when Red Hat announced the election of as President & CEO and a member of its Board of Directors, it did surprise those who did not know his background.

Whitehurst, who succeeded Matthew J Szulik, came from Delta Airlines and was credited with turning around the airline’s fortunes. Many, however, did not realise he also had a “geeky” background.

A native of Columbus, Whitehurst graduated from Rice University in Houston, Texas, with a bachelor’s degree in Computer Science and Economics. He also has an MBA from Harvard Business School.

“I also played with (Red Hat’s name for its Linux operating system) for a couple of years. I had an Apple II when they first released. Back in high school, I developed a contact management system which I sold to stockbrokers. Later, I joined Boston Consulting Group (BCG) where I wrote software to solve clients’ business problems but over time became a corporate finance guy,” he said.

Red Hat happened since Whitehurst needed “... a mission to fuel my work. Just turning around a random company had no interest for me. Red Hat is different. By doing well as a company at Red Hat, we are doing good. Open source is a way to focus on the customer, letting us grow, succeed, and change the landscape...all while doing something that is fundamentally good. Fighting for open standards and open formats (Red Hat is a supporter of the Open Document Format which is opposed to Microsoft’s Office Open XML or OOXML file format). These things will change society. I’m thrilled to be here, ” he adds.

First Published: Wed, September 24 2008. 00:00 IST