Indeed, it was a time of prosperity for Red Hat as the company saw yearly revenue grow from $42 million in fiscal 1999 to $400 million in fiscal 2007, an 852 percent increase.

These aren't times for reflection, however, as the powerhouse has put itself in front of new obstacles that will determine if it can reach the next plateau.

Wall Street tags Red Hat as being in an investment phase and will harshly judge a less than stellar result to its infrastructure platform strategy around middleware and virtualization. So far, returns are not good on Wall Street as Red Hat's shares have fallen more than 25 percent in the past year.

The company is being chided for less than expected first-year results in its middleware business anchored by its 2006 JBoss application server acquisition.

Subscription services for JBoss contributed $23.1 million to the overall revenue increase of $122.3 million last year, which amounts to 18.8 percent.

In last week's earnings call with financial analysts, CEO Matthew Szulik admitted he wasn't happy. "The rate of JBoss bookings and revenue growth has not met my expectations," he said. "We know we can do much better."

Red Hat's revenue, based 100 percent on its one- to three-year subscriptions for support and its training/consulting services, faces erosion as users get more familiar with Linux, defect to Oracle's cut-rate operating system support services for Red Hat users, or to services from system integrators.

Such erosion could provide financial pressure as the company has seen its subscription revenue rise from nearly 77 percent of total revenue in fiscal 2005 to just more than 85 percent in fiscal 2007, while seeing gross profit margin on subscriptions increase from 91 percent to 92 percent over those same years. Combined the two bumped Red Hat's overall gross profit margin from 80.4 percent to nearly 84 percent over that same time period.

New businesses will help stimulate new subscriptions, which entitle users to Red Hat technology and support services in a single bundle.

The company's middleware venture is wandering into a jungle where vendors, such as IBM, BEA, Oracle and Novell, are all carving out alliances to deflect Red Hat. Ditto in the virtualization market where VMware is crushing everyone, and Microsoft next year plans to join the fray with the same sort of hypervisor Red Hat built into its operating system.