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Red Hat Springboards into the Cloud, Big Data

Tickers in this article: RHT

NEW YORK ( TheStreet) -- Red Hat looks to have found itself to be in the right position to release the floodgates of a new revenue driver. Potential, fresh revenue streams are emerging amid the rising deployments of cloud architectures and higher mobilizations of big data solutions anticipated for this year.

Red Hat CEO Jim Whitehurst says that 2014 will be a "defining year" for the technology industry and underscored to TheStreet that Red Hat's leadership in open source and expanded work around OpenStack will be central to the software company's ability to capture these opportunities.

IT research firm IDC has been studying the opportunities as well, with storage systems and software research director Ashish Nadkarni weighing in. Nadkarni said 75% of the scale-out file-and-object storage market, much of which forms the plumbing for public and private cloud build-outs, is based on open source platforms, "meaning that it is falls within the reach of the total addressable market for Red Hat's systems, middleware and storage platforms."

The entire scale-out file-and-object storage market is forecast to reach $14.8 billion in 2014 in the U.S. and could grow at a compound annual growth rate of 24% between 2013 and 2017, as cloud storage spending reaches nearly $16.6 billion this year, according to Nadkarni.

Nadkarni says in that market, Red Hat Storage Server and OpenStack can serve as the storage platforms for private and public storage-as-a-service build-outs, while Red Hat Enterprise Linux can be leveraged as the systems platform for many of these deployments, given that they're software-defined storages built with commodity servers instead of commercial systems.

Nadkarni highlights that Red Hat's total addressable market in the infrastructure component of big data is composed of the storage aspect of infrastructure that is poised to reach $3.5 billion in 2014, as the overall market for big data infrastructure increases to $16.9 billion in 2017 from $7.8 billion in 2014, equating to a compound annual growth rate of 32.6%.

By way of partnerships with Hadoop distributors like Hortonworks, Red Hat can also make a play for the software component of the big data market that is expected to reach $3.7 billion in market value in 2014, Nadkarni noted.

CEO Jim Whitehurst addresses how Red Hat is unlocking the monetization opportunities of cloud and big data:

Tse: Jim, in what way has Red Hat's leadership role in open source been the company's springboard to the cloud?

Whitehurst: Red Hat's history of delivering highly-scaled, enterprise and government-grade quality and security based on the tenets of open source community development gives us an excellent baseline for distinguished positioning vs. closed vendors.

Red Hat has had the benefit of working with and in communities of customers and developers during a very strategic period during the commoditization of IT and this has matured core technologies, products, and service offerings in such a way that Red Hat is now well-positioned to help lead the market forward with both cloud and big data.