451 CAOS Theory 
A blog for the enterprise open source community
Red Hat: The Poland of Software Vendors (also: Shuttleworth weighs in)
Nick Selby, November 6, 2006 @ 10:22 am ETWe’ve been saying here and elsewhere that the Microsoft-Novell and Oracle-Red Hat announcements have been market changing events. Some ripples are at the fore: Microsoft has siezed an opportunity to simultaneously head off Oracle and irritate Red Hat. Novell has turned its greatest weakness (the spectre of irrelevancy as recently as last week) into what could prove to be a great strength (It’s a little creepy in its Karl-Rove-esqueness, actually).
And Red Hat itself now faces the real possibility of extinction … Overnight, Red Hat has become the flattest piece of land between two battling superpowers: the Poland of software vendors.
Less obvious is the effect on Ubuntu’s plans to burst onto the enterprise scene in the West. Ubuntu’s sponsor, Canonical’s, overriding strategy hinges on two key pillars. First, Ubuntu is feature-rich and easy-to-use, to appeal to non-fuddy-duddys – that next generation of young whippersnapper admins coming up in enterprise as we speak.
Second, the support model is flexible. Years before the Oracle and Microsoft announcements to provide support for someone else’s Linux distro, Canonical set out to provide support not just from itself but from an entire eco-system of other support companies. And the support could be bought for as little as a single server in a cluster.
The model was appealing precisely because of the Red Hat and Novell’s Soviet-style lock-ins – the very models which are now in flux. Now, we’re not saying that there is not still great value to the Canonical approach of democratizing support sources and terms, but there’s a fairly obvious question here: must Canonical’s strategy change because of this upheaval in the landscape? If not, why not? I mean, this here is game-changing stuff happening.
According to Mark Shuttleworth, CEO of Canonical, Ltd – Ubuntu’s sponsor – not. In an email over the weekend, he said,
“Our strategy remains unchanged. SuSE is still an essentially proprietary product, and the fact that Novell now needs to pay a fee to Microsoft for every licence of SuSE sold suggests that Novell has even less room to compete on service flexibility with Ubuntu now than it did before.”
True enough.
(see more conversations between The 451 Group and Mark Shuttleworth here, here, here, here and here)
From the unintentionally ironic Red Hat “Unthinkable” rant:
“An innovation tax is unthinkable. Free and open source software provide the necessary environment for true innovation. Innovation without fear or threat. Activities that isolate communities or limit upstream adoption will inevitably stifle innovation.”
Not to kick a fella when he’s down, but this is from Red Hat? The company which commoditized this stuff to begin with? …. Oh, never mind. Let’s take the point at face value and recognize that Red Hat is different from Microsoft.
Shuttleworth did allow, though, that the Microsoft-Novell alliance was, “Certainly an interesting twist, coming on top of Oracle’s announcement.”
From our Market Insight Service report by Raven Zachary and Nick Patience on the Microsoft-Novell announcement:
Linux distribution vendors such as Canonical, Mandriva and Collax will have a more difficult time finding a place in the enterprise. Vendors focused around Linux and Windows interoperability, such as Centeris and Centrify, will be competing directly with Microsoft and Novell interoperability efforts.
Microsoft and Novell will continue to compete in the operating system space, with both acknowledging the reality of a mixed source environment. This competition will only become more pronounced through the growth of Linux on the desktop.
And the final thought, from Raven and Nick, in the “Threats” section of that report:
Oracle and Red Hat continue to pose a threat to Microsoft’s and Novell’s goal of making SuSE the enterprise Linux standard, and the community support for Ubuntu via Canonical may undo the existing commercial Linux leaders over time. Microsoft’s veiled software patent threat to commercial Linux and open source vendors may backfire.
Comments (12) Categories: Licensing,Linux,Software,The 451 Group
[...] Is RedHat the Poland of software vendors? 451 CAOS Theory thinks so, and has some good commentary on the Linux cold war. Share and Enjoy:These icons link to social bookmarking sites where readers can share and discover new web pages. [...]
Nick – great post. The analogy of Poland is a colorful one. However, I don’t think Red Hat is actually facing extinction. The company should be doing contingency planning for an end game right now. Red Hat has been light on marketing, and I think it’s time for it to go on the offensive. How does it differentiate, other than the convenience of being the existing provider? What do vendors add to the value of Linux beyond 24/7 enterprise support and updating? Why did the the market punish it more for Oracle than for Microsoft/Novell? There are more questions than answers right now.
Thanks Raven. So let me clarify something: Do I think that it is ACTUALLY facing extinction? I don’t know. But it is a possibility: I wouldn’t want to challenge either Microsoft or Oracle to a spending contest (which is, at the end of the day, what this is: the two are spending heaps of money on marketing directly competing products, and face it, they both individually have at a minimum an equal number of corporate customers as RH – with the MSFT and ORCL FUD machines kicked on to full volume, it will likely come down to a tough sell to tell your boss why you’re sticking with RH). Any company facing both of those guys, when they’ve both entered into independent efforts to crush me, would be an even more daunting task. Is it inevitable? Nope. Is it a possibility? Absolutely. But you’re dead right that they need to get the word out – and not just in fairly defensive bloggy rants on the Red Hat website.
This post sbows how little you understand Linux/Open Source. Basically the Oracle statement said “We recoognize that Red Hat is the best, so we’re going to repackage their bits and try to support them.” Never mind that Red Hat has been leading the engineering process for Linux and many other Open Source projects like glibc and the gcc toolchain for over a decade. Oracle is an application company with almost no experience in the Linux space. Oracle’s support is NOT viewed as being good – when’s the last time you tried to manage a ticket on MetaLink?
The Microsoft play is just a plain old protection racket. They want to take Red Hat down by making threats that they will somehow sue anyone outside of Novell who uses any infringing code. Oh, and they’re going to be contributing code through Novell. Great. I’d feel just great about using any code that Novell submitted to any community project (like, say, the kernel). No, really. Hey, why are you all laughing?
So basically, Microsoft have said on the one hand that they will contribute code into the Open Source community through Novell, but if anyone else uses it, they’ll get sued. It’s a load of crap. Does no one remember the acrimony between Novell and Micorosoft over the IPX stack back in the Windows for Workgroups days? How about the fact that Microsoft pretty much decimated NetWare through anticompetitive practices?
Novell is insane if they think anything good is going to come of this. Allying with Microsoft has cause a huge uproar in the community. No one believes that Microsoft can be trusted, and Novell is pissing away what little community trust they had.
Net result? Novell will become even less relevant, and Red Hat will grow. Buy RHAT now.
Thanks for that – I’m not sure if it appears through my post that I am supporting what Microsoft is doing here, because I am not. I am saying that Red Hat is now facing a battle from two powerful, well-funded fronts simultaneously, and that is difficult. Whether I understand open source is, I think, less relevant than whether Red Hat’s investors do (interesting to see, in fact that it appears that they do based on Red Hat’s stock prices as of late). However investors are not known for their stick-to-it-iveness when it comes to threats from both Microsoft and Oracle. And that was really the point of my post – Red Hat has challenges, Ubuntu and Canonical are approaching the market entirely differently from the rest of the flock, Microsoft is doing what Microsoft does, and Novell is moving to stave off a real threat from all the others.
It might well be Novell that is the real Poland here. The battle has always been between Microsoft and its former mentor IBM.
IBM makes big bucks from free Linux, and would not want to have to pay an innovation tax on its own Linux contributions.
They seem to be the only company in America with a real understanding of Open Source and the benefits it gives, but this may be because they are a hardware company that now sell services.
Microsoft on the other hand, is a software company that is increasingly under threat from IBMs Open Source strategy in the server space. Now that others are finding ways to emulate IBM’s tactics, Microsofts business model of Apps on top of a pricy OS is definately under threat, so the pact with Novell may seem to give them a foot in the door to porting their money making apps to an Open Source OS.
The 350,000 OSS developers that created Novell’s SUSE product may have other ideas about how they want their product to be used, and could easily include a FSF clause preventing use under patent agreements designed to cicumvent the GPL.
That would leave Novell with only their own inhouse software.
I think the community is voting with its download power changing to other distros as one can see by the comments on Grklaw and othe ezines.
I for one have dumped SLED and SUSE from all my machines, and am looking for ways to get rid of Open Office tainted by SUN. SAMBA is a bit of a problem, but I can’t see how MS can sue on this one especially as the EU demanded they publish the APIs.
This is an excellent point. From a personal standpoint I generally agree with you and I too dumped SuSE for Gentoo a few years ago, and now 451′s Security practice has standardized on Ubuntu for ease of transition (to ease the experience of the non-Linux users being plopped down in front of a Linux box for the first time). From a business standpoint, your point about Microsoft’s motivations here, I think, is spot on, but at least in the short term an MS stack on a Novell platform would be bad news for RHAT, yes? Long term is another story of course: as I said in another post, “One has to wonder whether this is one of Novell’s most astute move in years or its worst move ever.”. For many of the reasons you state. And while I believe the conditions are dangerous for Red Hat, I must admit I have been surprised at its stock performance since the announcement, which has been essentially flat. That indicates that Red Hat’s investors aren’t as freaked out by this as I would have thought they would be. Again, I’ll say that my post was saying that Red Hat’s extinction is a possibility here. But I appreciate this excellent, well-reasoned comment, Stomfi, thank you.
[...] Outside its own posts, there is little comfort for Red Hat to be found. It is seen as “badly outgunned” or, more colourfully, as “the Poland of the software vendors”. [...]
[...] So this is curious motivation. Consider the 451 Group’s idea that Red Hat is becoming “The Poland of Software Vendors.” Is Red Hat sitting between Microsoft and Oracle initiatives, which may drive it into the ground (not that I’d characterize Poland that way–all analogies are only designed to go so far)? If Forbes’s stats indicate some of the motivation behind Novell’s deal with Microsoft, it will be interesting to see how many inroads it really will get from the Microsoft side. [...]
Regarding Red Hat and Oracle, I installed Oracle’s Enterprise Linux, and during the install, the name Red Hat came up over and over. The issue I am trying bring up here is that RedHat sells their enterprise linux for 1500/copy with no free downloads. Oracle is allowing downloads from their site right now for free. Whether or not people pay Oracle $100/machine/year($50 right now) or not, that has to cut into Red Hats botton line right now because getting what is virtually the same operating system for free is very appealing to the open source crowd. Especially when they can apply the patches themselves.I think as far as Red Hat is concerned, the Oracle thing is more deadly than the Microsoft/Novell thing.
Why choose the sell and rent back strategy…
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Good post. You make some great points that most people do not fully understand.
“aLess obvious is the effect on Ubuntu’s plans to burst onto the enterprise scene in the West. Ubuntu’s sponsor, Canonical’s, overriding strategy hinges on two key pillars. First, Ubuntu is feature-rich and easy-to-use, to appeal to non-fuddy-duddys – that next generation of young whippersnapper admins coming up in enterprise as we speak.”
I like how you explained that. Very helpful. Thanks.