Question-and-Answer Session
Tom McCallum
For today's question-and-answer period we will be asking everyone to limit themselves to one question and a follow up question, please. We have a lot in the queue. Thank you. Operator, you can go ahead and poll the audience for questions.
Operator
Your first question is from the line of Steve Ashley with Robert W. Baird.
Steve Ashley – Robert W. Baird
Hi, thanks. I'd actually like to talk about the virtualization business. You talked about the strong renewals, 132% being driven by the virtualization. Is there anything more you could tell us about what kind of adoption rates you are seeing for virtualization and what is driving that in the customer's eyes? Thanks.
Charlie Peters
To be clear, it's driven by AP and a lot of AP is driven by the benefits around virtualization. Unfortunately, all we have is really anecdotal from discussing with our channel partners and with our sales force on why people are picking AP. So again we know what the rate of AP adoption is and so we can guess on why. We are just seeing continuing interest in virtualization as a way to save on number of servers and power et cetera, et cetera. So clearly, strong interest there and since our recent announcement clearly increasing interest.
Steve Ashley – Robert W. Baird
And just a quick follow up on the free-to-fee business. We are trying to understand the opportunity there, is this a situation where someone is using RHEL and they are supposed to be paying for it and they are not paying for it? Or is this something where they are using Fedora and you are simply pointing out the value proposition of migrating them over to the paid RHEL? Thanks.
Jim Whitehurst
We had two different situations this quarter, Steve, both relate to the operating system. And one was a customer that was trying to just to do their own and realized it was too expensive to support their own and much better value and less money to buy a subscription. And another situation was one in which there was a customer situation where they reported more than they actually originally had paid for.
Charlie Peters
Okay. One other note quickly, Steve. And I was down in Latin America last week, and you know, frankly probably the majority of our deals of a material size are all free-to-fee. These are all customers who are currently running some community additions and as they get larger and start moving it into more mission critical applications they want support. So it really depends on where in the world and many different circumstances.
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