Red Hat is rattled. Sure, it remains the world's biggest Linux company by revenue market share. But it's beginning to feel that it's under pressure - and that it must respond.
That pressure is coming not from Microsoft, but from fellow Linux vendors. Individually, they aren't causing too much trouble, but collectively, they could be creating an environment in which customers are starting to question why they should pay Red Hat to support their Linux at all.
Since last November, Novell has tied a Linux migration service to SuSE Linux Enterprise, with support for existing Red Hat Linux systems for up to three years.
Novell's Red Hat customers can save 50 per cent on their subscriptions through its unified management tools and interoperability with Windows. In an email to The Reg, a Novell spokesperson claimed “strong demand” for the service, with customers including Moneygram, Baker Hughes, and VTI Technologies.
Novell has acted three years after Oracle chief executive Larry Ellison launched his company’s support business in an effort to bleed Red Hat dry. With it came Oracle's version of Red Hat, minus the Red-Hat logos, called Oracle Enterprise Linux.
Though they were launched with great fanfare, Oracle's service and its Linux distro haven't upset Red Hat, and last year, Ellison was notably muted in his assessment of both.
Ellison talked like a middle-aged mum, not his usual Alpha male self. He said he was "very, very proud of where we are today" with 4,000 customers. "Uptake of Oracle Enterprise Linux has been better than we anticipated," he claimed.
Despite Oracle, Red Hat has managed to defy gravity and convince customers to keep signing the checks. Its third-quarter results saw revenue increase 18 per cent to $194.3m, while revenue from subscriptions grew 21 per-cent to $164m.
And yet, there are signs the company is rattled.
Novell 'not entitled'?
In Europe, according to Cnet blogger Matt Asay, a Red Hat country manager has written to one customer about the Novell support offer, saying the company is "not entitled" to support Red Hat Enterprise Linux with maintenance service updates, bug fixes, or patches.
Curiously, the manager also said that Novell is not entitled under its 2006 agreement with Microsoft to sell or resell RHEL, which makes you wonder what Novell has been telling Red Hat customers or what Red Hat feels it must say to convince people not to move.
Of course, there's nothing to stop anyone from providing support for RHEL. The code is openly available. Oracle knew that, which is why it felt it could offer Unbreakable Linux.
Red Hat would not comment specifically on the letter despite repeated questioning from The Reg.
Next month, Red Hat plans to hold a webcast on "Understanding the Risks of Free and 'Low Cost' Linux." The VAR Guy has posted the pitch here.
"Join Red Hat for this webinar to learn why self supported Linux isn't a risk-free alternative to a Red Hat Enterprise Linux subscription. And understand how 3rd party supported Red Hat Enterprise Linux can become a nightmare to integrate into your infrastructure," Red Hat said.
This follows a blog last month that talked up the benefits of sticking with RHEL and Red Hat support instead of going with other vendors' forked distributions and services. "Truly supporting Red Hat Enterprise Linux is not only about support services, but also about the value of the entire Red Hat subscription," Red Hat said.
Clearly, there is a theme here, and Red Hat is brewing a collective response to Novell and Oracle. The questions is, Why? Red Hat's customers didn't flinch when Oracle offered Unbreakable Linux in 2007.
The kind of growth Red Hat reported in December must continue if the company is to realize CEO Jim Whitehurst's dream of making Red Hat the industry's first $1bn revenue Linux company. He was speaking in 2008 when Red Hat passed $500m. Last year, Red Hat grew 25 per cent to $652m.
The real hurdle to achieving this dream is in attracting, new paying customers. These come in two groups. One: existing users who might be starting to question why they should pay additional money to the company if and when they add extra servers. These are companies like Yahoo! who've opened the door to Oracle's Unbreakable Linux and Enterprise Linux.
The other group is completely new customers who ae choosing between RHEL, SuSE, or even Oracle for the first time and may not be familiar with the "value" of the Red-Hat package.
Red Hat is repeatedly ranked top for its level of support in a survey of CIOs. Clearly, Red Hat feels it's time to remind newbies and existing users just what they're getting for their money. ®