But even a quick look at the burgeoning Linux market reveals that Red Hat faces a crowd of competitive threats. A competitor lurks behind every server.
The deep-pocketed Oracle offers a clone of the Red Hat OS, as does the popular CentOS distro. Ubuntu is capturing legions of hearts and minds with its easy-to-use desktop releases. Novell SUSE (which supported Xen virtualization before Red Hat did) touts its Microsoft interoperability agreement – in theory reassuring Windows-based sysadmins. Sun Microsystems claims its OpenSolaris project has in excess of 10,000 members. And Hewlett-Packard offers support for Debian on some of its servers. (In 2006, HP claimed that $25 million in hardware sales was due to its Debian support.)
Still, said Illuminata analyst Gordon Haff, in the x86 world, Red Hat has “established itself as the go-to Linux for enterprise software certification. Novell SUSE also has a pretty good portfolio of certified apps, but in terms of market share it’s quite a ways behind.” The lopsided market share battle between this David and Goliath is, depending on who’s counting, 90 percent to 10 percent.
(However, Haff said, “Frankly there’s not that much difference, from a product perspective, between the different enterprise Linux products out there.”)
A key advantage Red Hat has over its competitors is its sheer longevity.
“We’ve seen a lot of these ‘flavor of the month,’ or ‘flavor of the year’ among Linux distributions over the past five years or so,” Haff said. “People talked a lot about Gentoo for a period, for example. But then the buzz kind of goes down.” At the moment it’s Canonical’s Ubuntu that’s riding the buzz wave, though Canonical doesn’t have the legacy data center presence of Red Hat.
Yet while Red Hat has achieved status as top dog, that’s not enough, Haff opined.
“Their bigger challenge is, in spite of this dominant position they have in certified enterprise Linux: they’re not that big a company. They’re not Oracle.” (Red Hat’s market cap is $3.5 billion, in contrast to Oracle’s $94.5 billion and Microsoft’s $257.3 billion.)
To thrive long term, the company needs to move into the neighborhood of major players. “I think one of the things that was discussed with their new CEO on board is: can Red Hat take it to the next level, and really move beyond just having a Linux offering?” Haff said. “Can they do more to leverage their JBoss acquisition? Can they do more around this messaging real time and grid initiative they have? And so forth.”
The company’s fate rests not so much on the quality of its enterprise Linux platform – the product is well regarded. Instead, “It’s kind of: it’s that all there is and all there’s going to be? In which case, Red Hat will presumably continue on as a company, but probably with fairly modest growth.”
On the other hand, growth for this small company means bumping up against some tough prospects. “As they try to build up, to a broader stack, a broad ecosystem of products, they’ll also be competing against best-of-breed, or ‘piece parts’ running on their own operating system base,” Haff noted.
In other words, growth is essential but it won’t be easy.
One of Red Hat’s key strategies for growing market share will be to stress cost savings.
“The whole context for enterprise infrastructure is changing right now,” said Scott Crenshaw, Red Hat’s VP of Enterprise Linux Business. “I think the real reason that companies increasingly deploy more open source – and I believe that will overwhelmingly be Red hat – is because we are attacking new cost drivers that historically Linux and open source haven’t attacked before, and that I don’t believe the competitors in the field address much at all.”
An application is an expensive thing to own, he noted. For each app, companies have to acquire it, install it, configure it, tune it, test it, deploy it, manage it, and certify it. The associated costs may account for 30 to 60 percent of an IT budget, depending on the situation.
The Red Hat Enterprise Linux (RHEL) platform is built to reduce this cost, Crenshaw said, by providing a common platform for apps to run on, and then insulating that package from changes.
“We’ve built a set of tools and support infrastructure, and policies and a set of ecosystems, that allow customers to take that application and run it anywhere,” he said. This adaptability includes deploying a given app on stand alone hardware, in a virtualized environment, or on demand.
Today’s data centers are often cobbled together from disparate silos of infrastructure: Linux, Windows, VMware, Solaris. “We’ve built a platform that allows you to treat that infrastructure as one,” Crenshaw said.
“So you can take any RHEL app and run it on a RHEL server, a Windows server, a VMware server, or a Solaris server. The silos get homogenized; you have much more normalized infrastructure.” In Crenshaw’s view, Red Hat’s competitors, in Linux, Windows and Unix, don’t offer this same level of flexibility and portability.
A Customer’s Experience
Like every other large newspaper, the Atlanta Journal-Constitution has grown ever more Web-centric over the years. As readers have migrated online, the newspaper’s server infrastructure needed to keep up.
When Jim Lann, manager of the paper’s Internet systems, sat down to discuss the upgrades with his supervisor, there wasn’t much doubt about which platform to deploy. It would be based on the LAMP stack, with Red Hat as the enterprise Linux.
Lann’s history with Red Hat stretches back several years. He once had a Red Hat server running at home. And though he’s tried a few flavors, he’s established a true comfort with Red Hat.
“My warm spot is with open source and that kind of technology,” Lann told me, explaining he was once a Mac guy, before migrating to Unix and Solaris, then finally growing to like Linux.
While there are many distributions available – Lann once set up a SUSE server – “the nice thing about Red Hat is that you get a packaged environment from a company that has experience with Linux – they’re not Johnny-come-lately.”
The newspaper’s Red Hat servers, Lann said, now handle about 140 requests per sever, per second, with some 22 servers (three of which are virtual) up and running fulltime. With that much load, a data center manager needs to know the system is sure and steady.
“There’s a continuity there, a continuity of business, and a continuity of technology, that gives me certain comfort when I’m running Red Hat,” he said. “I have a lot of faith that, when Red Hat says, ‘apply these security patches,’ as long as I’m running the standard Red Hat stuff, I’m not worried that those updates are going to break those packages.”
It is surely one of the oddities of Red Hat’s market position. Not that long ago (the late ‘90s) the company was an insurgent upstart, little known among major enterprise customers. Now, based on Lann’s comments, some IT managers view it as the entrenched choice, so reliable you can set your watch by it. But will the company maintain this position in the years ahead?
The other nominees in Datamation’s Product of the Year Enterprise Linux category were Novell SUSE Linux Enterprise Real Time 10 and Canonical Ubuntu 7.10 Server Edition.