Red Hat ratchets up co-opetition with IBM, HP

Computerworld - In a move that could help it fight foe Oracle Corp. but anger some longtime allies, Red Hat Inc. yesterday officially began selling and providing technical support for popular business software that runs on Red Hat Enterprise Linux.

The program, called Red Hat Exchange, lets companies using application "stacks" -- which consist of any of 14 mostly open-source applications -- deal with Red Hat as its "single throat to choke" when technical issues arise.

It also provides a new source of revenue for Red Hat at a time when it is being threatened by Oracle, which began competing with Red Hat directly by offering discount support for Red Hat Enterprise Linux last October. Last month, Oracle revealed it had won contracts from 26 Red Hat customers.

Red Hat has already provided support for some open-source applications for several years. The Exchange greatly expands that strategy and ensures that Red Hat gets its cut from vendors for any support work provided. It also allows the Raleigh, N.C., firm to avoid laying out cash, as it did last July when it spent $350 million to buy application server vendor JBoss Inc.

"I see this as providing an intermediate alternative between Red Hat simply not playing beyond a specific section of the stack at all and doing an acquisition as with JBoss and Sistina," said Gordon Haff, an analyst at Nashua, N.H.-based Illuminata Inc.

Red Hat Exchange seen as 'logical'

Red Hat first announced the Exchange in mid-March.

Billy Marshall, CEO of Linux appliance vendor rPath Inc. and a former sales executive at Red Hat, argued at the time that for an operating system vendor to offer support for software it didn't develop or own made as much sense as "Emerson Electric announcing that they intend to sell and service Whirlpool washing machines, dryers and refrigerators. Why would a consumer buy a Whirlpool appliance from a manufacturer of appliance motors?"

Haff called the move a "logical" one for the company. "Red Hat has long ceased to be merely an operating system vendor in the narrow sense," he wrote. RHX "provides a vehicle for the company to both sell and support a broader portfolio of products -- thereby helping to counter the breadth developed in-house of mixed-source companies like Novell."

The move could have repercussions for Red Hat supporters. Longtime allies such as IBM and Hewlett-Packard Co. both make money reselling and supporting Red Hat and open-source applications that run on top of the operating system and the Exchange announcement could ratchet up the 'co-opetition' among the companies.

Smaller support providers such as OpenLogic Inc. and Optaros Inc. may also be unamused by Red Hat's incursion.