Red Hat Walks the Line with Partners

By Peter Galli  |  Posted 2006-04-17 Print this article Print

News Analysis: Red Hat has redefined itself with the $350 million purchase of JBoss, but will existing partners want to play along?

Red Hat has significantly expanded its reach and product portfolio with the acquisition of JBoss for $350 million, but the company will have to navigate some potentially choppy waters with existing partners.

The acquisition of JBoss, announced April 10, means Red Hats web of partnerships has become more complicated. For instance, JBoss, as an independent open-source software vendor, signed deals with Red Hat competitors such as Novell and Microsoft.
While Red Hat says these deals will be maintained as long as customer demand is there, they could prove awkward going forward. Meanwhile, Red Hats acquisition could put it at odds with longtime partner IBM.
Some Linux users, such as Con Zymaris, CEO of Cybersource, in Melbourne, Australia, say that Red Hat has to continue its partnerships because JBoss software is licensed under the GNU GPL (General Public License) and thus cannot stop rivals from using the technology.

Nevertheless, how Red Hat management navigates this terrain will be closely watched by its customers, partners, analysts and competitors. Why? Red Hats next moves could define how the company evolves.

To Matthew Szulik, Red Hats CEO, the JBoss deal will give the company more clout to develop enterprise applications.

In an interview with eWEEK, Szulik said that the combination of Red Hats directory technology, certification and testing work, and security models for the Linux operating system and middleware give the company "an economic model, product portfolio and a service relationship" to be a "next-generation enterprise technology company."

Developers see Red Hat and JBoss as a good fit. Click here to read more. But analysts and competitors warn of potential risks for Red Hat as it starts competing directly with current partners such as Oracle and IBM.

Kash Rangan, an analyst at Merrill Lynch Global Securities Research, in San Francisco, sees such competition as a potential negative for Red Hat. "However, in the grand scheme of things, we believe that Oracle, IBM and BEA stand to lose more than they stand to gain by not continuing to support Linux and Red Hat. Why? By not cooperating together, they only implicitly strengthen the hands of Microsoft, which is already getting stronger on the server," Rangan said.

Cybersources Zymaris agreed. He said both IBM and Oracle know that Linux has a faster global adoption rate with a strong Red Hat—along with a strong Novell and a slew of other localized or specialized players—than with just one major Linux vendor.

Other enterprise customers, such as Dick Goulet, a senior Oracle database administrator, are not exactly excited by the deal but are glad Oracle wasnt able to consolidate its power.

Some Red Hat competitors are already strategizing how best to benefit from the potential cooling off of its relationship with IBM. Peder Ulander, vice president of software marketing at Sun Microsystems, of Santa Clara, Calif., told eWEEK that the deal created an opportunity for Suns OpenSolaris software. "Why not WebSphere on Solaris x86 being delivered on Sun or IBM boxes? Novell is not the only solution. We have a potential play there with our OpenSolaris stack," Ulander said.

But Red Hats Szulik told eWEEK that he did not pursue the deal with JBoss to go out and compete with partners in middleware. Rather, he viewed the move as a cornerstone of Red Hats overall long-term strategy to bring solutions to the open-source developer, build a common infrastructure model around security, and drive maintainability and management throughout the enterprise based on open source.

"Those competencies we believe will be value-adds to our existing relationships with IBM," Szulik said.

Other analysts, such as Scott Donahue of Tier 1 Research, a division of The 451 Group, also predict that Novell will benefit from Red Hats deal with JBoss since IBM would be "forced to move more rapidly to embrace Novell and perhaps even acquire the company. Novell will also continue to work with JBoss and will find more love from both Armonk [IBM] and Redwood Shores [Oracle]," said Donahue in Minneapolis.

For his part, Szulik said he is not overly concerned about a closer relationship between IBM and Novell, pointing to recent announcements of greater cooperation between the two and to the fact that IBM has invested $50 million in Novell.

Click here to read more about Red Hats acquisition of JBoss. "As Bob Dylan once said, you dont have to be a weatherman to know which way the wind blows. But were going to counter by producing an outstanding Red Hat Enterprise Linux 5.0 by the end of this calendar year, by creating an optimized open-source platform with JBoss, and by continuing the technical excellence and service and delivery we already offer," Szulik said.

Check out eWEEK.coms for the latest open-source news, reviews and analysis.
Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at


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