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Red Hat restructures sales force, expects channel sales to rise

Open source technology solutions provider Red Hat recently announced that it expects the channel to account for up to 75 percent of its sales within the next two years, as the company continues to expand into cloud computing software and middleware, according to CRN.

Red Hat recently restructured its direct sales force, allowing more sales to be handled by its partners – which number more than 6,000.

Sales from the company's channel accounts – including original equipment manufacturer sales and sales through independent software vendors, value-added resellers, systems integrators and others – presently make up between 60 and 65 percent of its revenue, and its worldwide partner sales grew by 34 percent in its fiscal year 2011.

"We see growing demand from our partners all across our product lines," said Alex Pinchev, executive vice president and president of global sales, services and field marketing at Red Hat. "It takes time to build a partnership culture in the company [but] I think we're there."

Since acquiring open-source application server developer JBoss in June of 2006, the company expanded its offerings from the Red Hat Enterprise Linux operating system software that used to account for much of its business. Red Hat's current software offerings include identity management, systems management and virtualization products, and it most recently debuted its CloudForms Infrastructure-as-a-Service and OpenShift Platform-as-a-Service software, which is primarily targeted at systems administrators and information technology operations managers.

The company also plans to enhance its partner training and certification program and expand its channel acceleration program – which was initially aimed at resellers of its virtualization software – to all of its partners. The program provides channel partners with discounts, technical support and training.

According to Pinchev, the company continues to sell directly to a small number of large accounts, including several major financial services institutions, and its virtualization software is proving to be the most popular with channel partners.

Although Red Hat is still interested in recruiting new partners, the company's main focus is on getting its current partners to carry a broader range of its products. Currently, channel partners generate between $4 and $10 in services revenue for every $1 of middleware sales for the company, Pinchev said.