September 27th, 2010

Is Red Hat Making the Right Move?

The news out of Raleigh is that Red Hat’s considering moving. It seems they’ve outgrown their location at N.C. State University where they’ve been since 1996 and, like Daniel Boone, they need a little elbow room. They’re considering finding a new location in the Raleigh area, presumably so they can remain near high tech Research Triangle Park, but they’re also reportedly looking at Atlanta, Boston and Austin, Texas.

As a North Carolinian, I would hate to see Red Hat leave our state, but a move to another area might be wise for the world’s largest Linux company. I’m just not sure the cities under consideration are where they need to go.



The trouble with Raleigh is that it’s a relatively isolated place for a software company of Red Hat’s stature. There’s not an Oracle, IBM, Apple, Google or Adobe in the neighborhood, and while it’s true that Red Hat isn’t anywhere nearly as large dollar-wise as any of these, being the most successful purebred FOSS company in the history of open source puts them in the same league. At this point they’re positioned to grow, and if they really want to grow rapidly, they should go ahead and make the jump to Silicon Valley to play with the big boys.

Raleigh made sense in 1996 when the Red Hat folks were just finding their legs. Being in the provinces, out of sight from hardball playing corporations who’d be happy to steal or usurp every good idea, probably worked to their advantage, letting them establish themselves in relative safety. The close proximity of Duke University and University of North Carolina at Chapel Hill (UNC-CH), not to mention their relationship with N.C. State, was also an asset.

But now it’s time to move.

With $748 million in revenue last year and 3,200 employees, the company is on the verge of becoming the first billion dollar open source company. If their current headquarters are becoming too crowded, making a move necessary, it might be time to play on the same court as most of the other major league players. In other words, it might be time to load Jed, Granny, Elly Mae and Jethro into the old jalopy and move out to California.

There would be a lot of advantages to being headquartered in or around Silicon Valley, not the least being the huge pool of developers and coders that would be available to them on a moment’s notice (not that they’re hurting for these talents in-house, mind you). Being in daily face-to-face contact with other tech giants would also open doors for them that could result in partnership opportunities, and it would also afford them the chance to keep a closer eye on the competition.

This would also send a positive message to potential enterprise customers who’re wavering on the fence about giving up Windows for RHEL. Silicon Valley headquarters would give the perception of solidity – and as an advertising friend of mine always says, perception is everything.

There would be disadvantages to playing in the South Bay as well. They’d be in the midst of the shark infested world of corporate espionage. Security would have to be tightened, and they might want to learn a few lessons from Apple about being tight lipped about new product development and about what you don’t leave behind when you visit your favorite watering hole. But that’s all part and parcel to living and playing in the land of the giants.

If Red Had doesn’t move to the Bay Area, then they should remain in Raleigh. After all, they know and are comfortable with the business climate here in North Carolina and have good relations with the folks at State, UNC-CH, Duke and Research Triangle Park. To boot, I’m certain the state will come up with some tax incentives to keep them here in the Tarheel State if they only ask.

But they really should consider moving into Oracle’s back yard to fly their “don’t tread on me” flag.

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