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    Red Hat to Buy FuseSource to Bolster Middleware Play

    By
    Darryl K. Taft
    -
    June 28, 2012
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      Red Hat (NYSE: RHT) announced that it has signed a definitive agreement to acquire open-source middleware provider FuseSource from Progress Software.

      Red Hat did not disclose the financial details of the deal announced June 27 at its Red Hat Summit and JBoss World 2012 event in Boston. However, company officials said FuseSource, a provider of open-source integration and messaging, will enable Red Hat to accelerate the delivery of application integration products and services to enterprise customers.

      €œApplication integration software is one of the fastest-growing segments of the enterprise software market,€ said Craig Muzilla, vice president and general manager of middleware at Red Hat, in a statement. €œAs cloud computing becomes more prevalent, enterprise customers are demanding greater application integration to enable seamless use of cloud computing. With the addition of FuseSource to our middleware portfolio, we will enable customers to experience greater integration capabilities and flexibility. FuseSource€™s technologies, expertise and commitment to open source make them a great fit.€

      Headquartered in Bedford, Mass., FuseSource serves many Fortune 500 companies with open-source integration and open-source messaging products based on Apache ServiceMix, Apache ActiveMQ, Apache CFX and Apache Camel.

      FuseSource technical leadership includes respected open-source contributors that are expected to continue to play important roles in the middleware community projects. Through the FuseSource acquisition, Red Hat will enhance capabilities within JBoss integration software. This technology complements the JBoss product line and will move Red Hat closer to the next generation of application integration products, Red Hat said.

      eWEEK attended the FuseSource CamelOne 2012 event in May where the company advanced its €œIntegration Everywhere€ strategy with Fuse ESB Enterprise 7.0 and Fuse MQ Enterprise 7.0, two new open-source integration and messaging platforms. The prospect of a potential acquisition was an underlying current at CamelOne as the company was coming out of one of its best quarters yet, sources close to the company said. However, shortly following the conference, the company had layoffs that affected some key personnel.

      Analysts See Camel as the Jewel in the Crown

      James Governor, an analyst with RedMonk, told eWEEK the Red Hat acquisition of FuseSource is a great fit. “Red hat doesn’t expect to make absurd margins on the company but knows how to make money from services and education a la JBoss. Camel is a great asset,” said Governor.

      Eric Newcomer, former CTO of IONA Technologies, agreed. “The jewel in the crown is Camel, which provides the integration capabilities and features Red Hat is looking for,€ Newcomer said. €œThey are definitely going to want to incorporate Camel into the JBoss suite. JBoss already supports CXF as an option for JAX-WS [Java API for XML Web Services]. However, I think there may have to be a lengthy debate about how well everything else fits, and how to rationalize the multiple ESBs [enterprise service buses], messaging systems and Web service stacks that Red Hat now owns. But I’m sure this will result in a win-win in the end for both sets of customers.”

      IONA Technologies, now a part of Progress Software, acquired LogicBlaze in 2007. And after the Progress acquisition, the LogicBlaze team and assets spun out to become an operationally independent entity known as FuseSource.

      €œThis immediately makes us the No. 1 open-source integration and messaging stack (among other things) providing a distributed ESB & messaging system together with integrated data transformation, rules engine (BRMS), CEP, BPM and registry€”with full Linux, storage, data services, CDI [customer data integration], Web app & JEE support too€”all in a highly modular architecture. €¦,€ said James Strachan a software fellow at FuseSource, in a blog post. €œOur technology and communities already overlap (e.g., Apache Camel & Apache CXF usage) & already fit together pretty cleanly, but over the next few years, we’ll be creating even better integration and tooling with the JBoss team; and where it makes sense to do so, we’ll consolidate things together so we’ve a single modular open-source stack for every integration & messaging need either on premise or in the cloud, that€™s lightweight and easy to use.€

      Meanwhile, Larry Alston, president of FuseSource, said Red Hat and FuseSource are €œcompletely aligned€ in their vision for open source.

      In a blog post, Alston added: €œThis acquisition is a huge win and source of momentum for both our customers and our partners. The FuseSource team will continue to offer the highest qualities of service, and to invest heavily in the technology€”but now with access to additional expertise and a broader portfolio of technology. We are very excited about taking our open-source integration products to the next level, and we will continue to share the details of this acquisition with you as they become available.€

      Rob Davies, CTO of FuseSource also posted on the acquisition, noting that the companies had been huddling over a potential deal. €œWe’ve been talking to Red Hat for a while, and it is very apparent that combining our technologies would enable FuseSource to deliver a complete integration solution for our customers,€ he said. €œThere are many complementary technologies (JBoss Enterprise BRMS) but also many overlaps. However, it is our aim to produce consolidated integration solutions that will dominate the integration space. FuseSource has over 200 customers, many large enterprises that are household names. We wouldn’t be joining Red Hat if we didn’t feel this was going to be the very best outcome for them.€

      €œThis acquisition makes sense for Red Hat from a product line standpoint, as it allows them to plug a gap in their middleware portfolio,€ said Pat Walsh, chief marketing officer at Talend, which competes in the open-source middleware space. €œHowever, Talend is keeping its key differentiation, the holistic integration solution that brings together data, application and process integration in a single and unified platform. Red Hat does not have data management capabilities by any means. From the FuseSource perspective, we are happy for our Apache project colleagues who have found a new home, since it was clear that they were quite distressed by Progress€™ divestiture plans. We know, however, that not all customers will follow; several of them have already moved along and engaged with other open-source ESB vendors. … But Red Hat is buying a technology here, not market share anyway.”

      Yet, as in many of these acquisitions in the industry, particularly open-source ones, the activity is often as much about the personnel as about the technology involved.

      As Newcomer told InfoQ when IONA acquired LogicBlaze back in 2007: €œThe biggest thing about the acquisition is really the people we’re getting. The LogicBlaze guys can really help us with our open-source business because of the experience they have, their active participation in the Apache community and their successful relationship with their existing customers. We think they will be able to immediately help us accelerate our open-source line of business.€

      But of course not everyone agrees that this deal is a win.

      “We consistently hear from partners and customers about the strategic importance of integration, and this deal validates this space yet again,€ Greg Schott, president and CEO of MuleSoft, a FuseSource competitor, told eWEEK. €œWhile the JBoss application server has been very successful for Red Hat, they are clearly looking for a way to become relevant in integration and SOA [Service-Oriented Architecture]. With FuseSource, Red Hat is putting its weight behind the ServiceMix project, which trails Mule by a wide margin in terms of user adoption. For example, Mule has three times the community activity on developer forums and four times the job listings specifying Mule versus ServiceMix experience. Red Hat is indicating that it’s important to have a credible offering in this massive and growing space, and it will be interesting to see how they attempt the integration of the FuseSource stack with their current product set.”

      The consummation of the acquisition is subject to customary closing conditions. Red Hat does not expect that this transaction will have a material impact on its financial statements for fiscal year 2013. Red Hat expects to announce comprehensive commercialization plans later this summer.

      Avatar
      Darryl K. Taft
      Darryl K. Taft covers the development tools and developer-related issues beat from his office in Baltimore. He has more than 10 years of experience in the business and is always looking for the next scoop. Taft is a member of the Association for Computing Machinery (ACM) and was named 'one of the most active middleware reporters in the world' by The Middleware Co. He also has his own card in the 'Who's Who in Enterprise Java' deck.

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