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Red Hat Again Tries to Move Beyond OS Level

Planned purchase of JBoss gives Linux vendor new hope in app server market

By Eric Lai and Heather Havenstein
April 17, 2006 12:00 PM ET

Computerworld - Red Hat Inc.'s planned acquisition of application server vendor JBoss Inc. is its third attempt to move up the open-source software stack in a big way. And it's hoping that this time proves to be the charm.

Red Hat has had limited success at getting users to adopt the directory server software it launched last June and a Java-based application server that it released in 2004. But some IT managers applauded its proposed marriage with JBoss.

"Of all the potential firms that could have acquired JBoss, we feel that Red Hat - being an open-source proponent -- is a good match for us," said Barry Strasnick, CIO at Citi-Street LLC, a Quincy, Mass., company that manages benefits programs for companies and government agencies.

CitiStreet, which formerly was a big user of BEA Systems Inc.'s WebLogic application server, started moving to the open-source JBoss technology two years ago. Now the company uses JBoss on top of Red Hat Linux to support all of its mission-critical applications, Strasnick said.

Badri Nittoor, CEO of JBoss systems integrator Tripod Technologies LLC in Cherry Hill, N.J., said the acquisition will move Red Hat closer to having an enterprise-class stack of open-source software.

But he added that it remains to be seen how well the cultures of the two companies will mesh, since JBoss has more control over the source code for its software than Red Hat does over Linux.

Raleigh, N.C.-based Red Hat said it agreed to pay at least $350 million in cash and stock for Atlanta-based JBoss. It added that the price tag could rise to $420 million if JBoss meets certain financial targets under Red Hat's ownership.

Red Hat unveiled its Directory Server software, bought from America Online Inc.'s Netscape division, at its first user conference last spring.

Stiff Competition

But that market is dominated by Microsoft Corp.'s Active Directory, followed by Novell Inc.'s eDirectory software, said Sara Radicati, principal analyst at The Radicati Group Inc. in Palo Alto, Calif. Red Hat's market share "is very small, let's put it that way," she said.

Red Hat also offers an application server based on the open-source Jonas technology developed by the ObjectWeb Consortium in Montbonnot, France. Red Hat CEO Matthew Szulik said during a conference call last week that the company has made "a significant investment in Jonas, and we expect that to continue."

But Laurent Lachal, an analyst at London-based Ovum Ltd., said Red Hat has been disappointed by the adoption of Jonas and is unlikely to devote a lot of resources to that technology once it owns JBoss.

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