System z Update
A presentation at Forrester Analyst Call by Shawn Wells
System z Update th October 15 2009 Analyst Call Shawn D. Wells sdw@redhat.com Director, Global System z Sales & Strategy Nick Carr ncarr@redhat.com Director, Industry Analyst Relations
Agenda State of the Business - Red Hat Corporate Overview - Revenue growth - Updated market share (through CY2008) - Updated Red Hat percentage of new workload sales Current & Future Strategy Customer Stories
State of the Business
Headquarters: Raleigh, NC - Founded 1993 - IPO 1999 - Operates in 27 countries - 65 offices - Engineering in: Raleigh, NC Westford (Boston), MA Mountain View, CA Minneapolis, MN Toronto, Canada Raanana, Israel Beijing, China Pune, India Brno, Czech Republic Year ended February 2009 - Revenue: $653 million - Employees: ~3,000
Red Hat Product Portfolio INFRASTRUCTURE MIDDLEWARE Red Hat Enterprise Linux - Server - Client Red Hat Enterprise Linux Advanced Platform Red Hat Enterprise MRG Red Hat Enterprise Virtualization JBoss Enterprise Application Platform - Web Server JBoss Enterprise Communications Platform JBoss Enterprise SOA Platform JBoss Enterprise Data Services JBoss Enterprise Portal Platform JBoss Enterprise BRMS JBoss Enterprise Frameworks JBoss Hibernate, JBoss Seam, JBoss jBPM, JBoss Rules JBoss Developer Studio MANAGEMENT Red Hat Satellite JBoss Operations Network Red Hat Directory Server Red Hat Certificate System Red Hat Enterprise Virtualization Manager for Servers/Desktops SERVICES Red Hat Consulting Red Hat Support Services Red Hat Training
Why Open Source? Strategic elimination of vendor lock-in OSS naturally creates multiple vendors Improved security Proven security through better technology & threat response record Auditability Customers and industry can verify standards adherence, quality & flexibility Cost reduction in multiple dimensions Hardware; system administration; compute transactions/watt; license management Solution Ecosystem OEM and ISV suppliers across the IT industry are focusing on delivering OSS solutions Technology All leading software technology development today is being done under the OSS model
Proprietary Open Source Oracle/IBM Portal, Oracle BPM, ILOG JRules JBoss Portal Platform, JBoss jBPM, Rules Framework BEA WebLogic, IBM Websphere JBoss Enterprise Application Platform BEA AquaLogic, IBM ESB, IBM EII JBoss Enterprise SOA Platform, Enterprise Data Service Platform, JBoss Operations Network (management) IBM Websphere MQ, Tibco EMS Red Hat Enterprise MRG Messaging eDirectory , SunOS Red Hat Directory Service, Certificate System Data Synapse, Platform Red Hat Enterprise MRG Grid EMC PowerPath Multi-path I/O Veritas Storage Suite LVM, CLVM, Global File System VMware Virtualization Red Hat Enterprise Linux AIX, HP-UX, Solaris Red Hat Enterprise Linux, Red Hat Enterprise MRG Red Hat Satellite (management) Veritas Cluster Suite Red Hat Cluster Suite
Red Hat Annual Revenue
Red Hat Joins the S&P 500 ● ● ● On July 24th Red Hat (NYSE: RHT) became one of the S&P 500 companies The S&P 500 is widely regarded as one of the best measurements of the US equities market. It includes 500 leading companies of the U.S. economy including J. P. Morgan, GE, IBM, and Google. Investors use the index to build a diversified portfolio of stocks that best mirrors the US markets. The inclusion in the index is based on Red Hat’s strong viability and position of relevance in the marketplace.
Red Hat System z Revenue System z Platform Revenue Red Hat Enterprise Linux Subscriptions $6,000,000.00 +71% YOY Revenue ($USD) $5,000,000.00 +177% YOY $4,000,000.00 +156% YOY $3,000,000.00 +231% YOY $2,000,000.00 $1,000,000.00 +126% YOY $0.00 2004 2005 2006 Red Hat Fiscal Period 2007 2008 2009
Historical Events System z Platform Revenue Red Hat Enterprise Linux Product $5,000,000.00 $4,500,000.00 Revenue ($USD) $4,000,000.00 2004: First RHEL for System z sale Late 2005: Dedicated System z Sales, Engineering and Support teams formed $3,500,000.00 $3,000,000.00 June 2007: IBM exclusively selects Red Hat to re-launch global Linux on System z efforts [1] $2,500,000.00 $2,000,000.00 $1,500,000.00 $1,000,000.00 $500,000.00 $0.00 2004 2005 2006 2007 2008 2009 Red Hat Fiscal Year [1] http://www03.ibm.com/press/us/en/pressrelease/21513.wss IBM pays for Red Hats Common Criteria evaluation, in which RHEL5 became the highest government rated Linux operating system (exceeding both SuSE and z/OS) April 2009: Co-Funded 55 day Global System z executive tour through APAC and EMEA (55 days, 18 cities, 10 countries)
Red Hat System z Revenue System z Platform Revenue Red Hat Enterprise Linux + Layered Products $18,000,000.00 +335% $16,000,000.00 Revenue ($USD) $14,000,000.00 $12,000,000.00 $10,000,000.00 “Drag Along” RHEL $8,000,000.00 $6,000,000.00 $4,000,000.00 $2,000,000.00 $0.00 FY2004 FY2005 FY2006 FY2007 Red Hat Fiscal Period FY2008 FY2009
Red Hat System z Market Share Linux on System z Red Hat % of Market Share 37% 40% 35% Market Share 30% 18.4% 25% 20% 15% 11.7% 7.8% 10% 5% 0% 2004 2005 2006 Calendar Year 2007 2008
Future Strategy
Red Hat / IBM Relationship 10 years of joint development Red Hat and IBM Ongoing collaborative projects 10 Years of Collaboration Platform support Innovative feature development Usability Open virtualization Open Client for Linux Linux Test Project, Real Time, System Tap IBM runs Red Hat… …Red Hat runs on IBM Two industry leaders working as one to maximize the Linux advantage 1991 1994 “Hey Everybody, Version 1.0 of Red Hat Commercial I’m doing a (free) Linux operating system…” 1990 1995 1999 2002 2009 + IBM and Red Hat Initiative to port Red Collaboration on announce Linux Hat AS to all IBM open virtualization Alliance hardware brands solutions 2000 2005
Emergence of Competitive Advantage Internal Sources of Change Some firms have greater creative and innovative capability
Emergence of Competitive Advantage Internal Sources of Change Some firms have greater creative and innovative capability ● ● ● LVM2, md - maintained KVM virtualization- developed and maintained Kernel 2.6 Audit subsystem written and maintained ● ipsec - maintained ● crypto - maintained ● ext3 - Written and maintained ● vfs- Written and maintained ● Kernel 2.6 Virtual Memory manager - Written and maintained
Emergence of Competitive Advantage External Sources of Change Internal Sources of Change
- Changing Customer Demand - Changing Prices - Technological Change Some firms have greater creative and innovative capability Resource “heterogeneity” among means differential impact Some firms faster and more effective in exploiting change
Red Hat Development Model ● ● Collaboration with opensource communities; individuals, business partners, customers Kernel, firewall, apache, etc
Red Hat Development Model FEDORA ● ● ● ● ● Bleeding edge Sets technology direction for RHEL No commercial support Released in ~6mo cycles Fedora 8,9,10,11 = RHEL6
Red Hat Development Model Red Hat Enterprise Linux ● Commercially Viable ● Q&A, tested ● ● ● H/W + S/W Certifications 7-10 year support Major releases 2-3yr cycle
Fedora for System z Opens Linux on System z development to entire Open Source community, not just IBM, Red Hat, and Novell. Linux for System z now follows same development process as every other platform, allowing for faster Q&A, faster feature inclusion, and increased stability Differentiation from Novell http://fedoraproject.org/wiki/Architectures/s390x
System z in Academia (zNexGen) ● Free RHEL to university partners – Marist College – Binghamton – NCCU – San Diego State – … etc Currently working on creating an Open Source Linux for System z curriculum for Academic partners and the larger community
System z in Academia North Carolina Central - Nations first public liberal arts college funded for African-Americans, located in Durham, North Carolina. -With nearly 9,000 students enrolled, the historically black university is diverse. International studies and exchange programs attract exchange students from more than 12 countries, including Liberia, India, Senegal, Sierra Leone, Nepal, China, the Czech Republic, Nigeria, South Korea, Russia, the Dominican Republic, Mexico, and South Africa.
APPENDIX: Customer Stories
Bank of New Zealand The Challenge A bank moves from SUN SPARC to System z10 with Red Hat Enterprise Linux to reduce their carbon footprint and address datacenter cost and capacity concerns – A data center with 131 SUN SPARC servers was at capacity – Bank of New Zealand needed to grow, reduce emissions and costs, become more open, and become carbon-neutral by 2010 The Solution – Consolidate 131 SPARC servers down to just 1 IBM System z10 mainframe (5 IFLs) running Red Hat Enterprise Linux “Deploying IBM mainframes with Red Hat Enterprise Linux to address our carbon footprint and cost savings concerns was a very big deal, especially at the senior management level.” Lyle Johnston Infrastructure Architect Bank of New Zealand The Benefits –Bank of New Zealand reduced power consumption by close to 40%, heat output by 33%, datacenter footprint by 30% http://www.redhat.com/about/news/prarchive/2009/bnz.html
Handelsbanken Large European bank migrates from Novell SuSE, standardizes on Red Hat Enterprise Linux and z/OS for IBM System z10 The Challenge – Maintain a highly resilient and secure network that scales based on business demands. The Solution – A hybrid solution of utilizing z/OS and Red Hat Enterprise Linux on IBM System z10 servers The Benefits –The bank’s virtualized environment has helped to lower costs by minimizing the need for additional systems that require more energy and space, translating into a greener IT infrastructure “Most important for Handelsbanken is that we can achieve all the benefits of virtualized systems, while still maintaining a secure and flexible environment with high availability and reliability through Red Hat Enterprise Linux. These elements are extremely important to our business , especially when running transaction-intensive applications. Red Hat Enterprise Linux on System z has helped us meet mission-critical needs for our organization” http://customers.redhat.com/2009/04/22/handelsbanken-offers-21st-century-banking-services-using-ibm-andred-hat-solutions/
City of Recife, Brazil Brazil City of Recife’s computer technology organization finds long-term reliability with Red Hat Solutions The Challenge – Find a secure, stable platform to bring municipal tax, urban planning, health, education, budget, financial and shopping port systems online The Solution – A hybrid solution of Red Hat Enterprise Linux for distributed and IBM System z platforms, combined with JBoss Application Server and IBM WebSphere. The Benefits –Since implementing Red Hat solutions, the government has enjoyed an extremely stable platform, ISV compatibility and cost reduction for its management of over 2,000 machines http://www.redhat.com/about/news/prarchive/2007/emprel.html “The adoption of Red Hat solutions allows us to ensure compatibility and the knowledge that we can install its solutions without concern. Additionally, we didn’t have to use Red Hat support, which in our Opinion is an excellent sign of stability and reliability” Luis Siquera, Director of IT Infrastructure
EDB Nordics EDB implements Red Hat solutions for the reliability of in-house Mainframe computing The Challenge – Offer customers a standardized operating system for all Linux-based IT services, crossing financial services, retail, telecommunications and the public sector The Solution – Red Hat Enterprise Linux on IBM System z running in LPARs The Benefits –Via the System z LPAR feature, EDB is able to securely provide hosting to various customers across industries, each with their own security requirements http://www.redhat.com/about/news/prarchive/2008/edb.html “There are clear advantages to mainframe computing including high reliability, security and resource savings in the amount of energy and cooling capacity used to run an application. We now utilize Red Hat Enterprise Linux for our in-house mainframe computing and we’ve experienced a rising demand among customers to whome we can offer Red Hat Enterprise Linux for IBM System z” Helge Forberg Section Chief, Application, Automation and Support Systems
Fratelli Carli Italian olive oil manufacturer enhances performance with RHEL5 on IBM Mainframes The Challenge – Ensure the fast processing of customer orders by reducing system response times and maintaining consistent performance levels, even during peak periods The Solution – 6 virtualized instances of Red Hat Enterprise Linux 5 running on IBM z/VM, DB2/UDB database, Ware Place and Tomcat, on IBM System z9 Business Class mainframe “I like Red Hat Enterprise Linux because it is a standard Linux product much closer to the logic of a mainframe than other products. I am totally satisfied with this choice. Red Hat support is very competent and always available, and it has supported me very well in the completion of this complex project” Marco Gardini Mainframe System Architect The Benefits –Sub-second response times maintained for order processing http://www.europe.redhat.com/solutions/info/casestudies/pdf/carli_english.pdf
Salt River Project Salt River Project migrates to Red Hat Enterprise Linux on IBM Mainframes for flexibility and performance The Challenge – Search for a replacement to propriatary software for their legacy IBM mainframe that could provide greater flexibility, manageability, and utilization opportunities The Solution – Migrating from HP-UX to Red Hat Enterprise Linux with Red Hat Network Satellite on IBM System z “When evaluating Linux mainframe solutions, we experimented with SuSE because it had an early relationship with IBM for that architecture, but Red Hat Had become very mature in the mainframe environment, too. Since we were already learning towards Red Hat in our distributed environment, chosing Red hat on the Mainframe coincided perfectly with our desire to have one corporate standard for Linux” The Benefits –Experienced cost savings, boosted performance, stable and reliable management, consolication and valuable technical support. Managing VMWare and x86 Linux from their IBM System z https://listman.redhat.com/f/pdf/customers/SRP_CaseStudy_web.pdf Kevin Masaryk Senior Linux/UNIX Administrator
Presented Red Hat’s System z business to Forrester, an industry analysis firm. Covered state of the union — revenue, market share, technical developments, and recent customer wins.
Co-presented with Nick Carr, Red Hat’s Director of Analyst Relations.
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