Red Hat: Building $600 Million Partner Channel?

red-hat-partner-program

Let’s start with the basics: In an April 30 blog post, Red Hat’s channel team says the upcoming road show will bring “our world-class Sales Training directly to partners across North America.”

The two-day sessions, Red Hat claims:

Red Hat’s Channel Revenue

Yada, yada, yada… what does all this mean to channel partners? Plenty. Red Hat now derives more than half of its annual revenue from partners, and the company is striving to push that figure closer to 60 percent.

Let’s look at the numbers another way:

1. Today: Red Hat’s annual revenues stand at about $652 million today. Assuming roughly half of that revenue is channel-driven, that means partners generate roughly $326 million in annual channel revenue for Red Hat.

2. Five Years Out: Let’s assume Red Hat grows at a nominal 10 percent annually for five years. (Red Hat, The VAR Guy expects, will easily beat that growth rate.) At that growth rate, Red Hat would have about $1.05 billion in annual revenues in five years.

3. Partner Impact: Now, assume Red Hat hits its goal of generating 60 percent of sales through the channel over the next few years. Sixty percent of $1.05 billion is roughly $600 million.

Translation: The VAR Guy thinks Red Hat’s channel sales will essentially double over the next five years, from roughly $326 million today to $600 million down the road.

Please note: All of the figures above are based on quick math from The VAR Guy’s white board (scary, eh?). The five-year figures do not represent any type of financial forecast from Red Hat itself.

Spreading the News

Still, Red Hat is about channel growth. That’s why Red Hat is hitting the road and getting out in front of partners. Channel sales don’t just happen. Red Hat needs to cross-train solutions providers to offer both Linux and JBoss.

Plus, Red Hat needs to evangelize the new Open Source Channel Alliance, which involves nine other application providers and potentially 15,000 Synnex resellers.

The evangelism starts in Dallas, May 5-6, where Red Hat will open its training road show. A North East US event is planned for Fall 2009. And don’t forget about Red Hat Summit (September, Chicago).

Plus, a top member of Red Hat’s partner organization is confirmed to speak at CompTIA Breakaway, a channel event that typically attracts more than 1,000 resellers and VARs. (Full disclosure: The VAR Guy is playing a role in some of Breakaway’s content development.)

So there you have it: Pure facts — Red Hat is hitting the road to strengthen its partner network. Plus some speculation — a $600 million channel business could be in the making… And that $600 million figure doesn’t include all of the hardware and consulting services VARs can wrap around Red Hat solutions.

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