Jonathan writes:

“Where are the revenue synergies?

The more interesting question is “where aren’t the synergies?” Wherever MySQL is deployed, whether the user is paying for software support or not, a server will be purchased, along with a storage device, networking infrastructure – and over time, support services on high value open platforms. Last I checked, we have products in almost all those categories.

In addition, the single biggest impediment to MySQL’s growth wasn’t the feature set of their technology – which is perfectly married to planetary scale in the on-line/web world. The biggest impediment was that some traditional enterprises wanted a Fortune 500 vendor (”someone in a Gartner magic quadrant”) to provide enterprise support. Good news, we can augment MySQL’s great service team with an extraordinary set of service professionals across the planet – and provide global mission critical support to the biggest businesses on earth.”

I can understand the part about synergies for Sun.  But I’m confused that Sun, and/or MySQL believe that the major impediment to MySQL growth was that MySQL wasn’t a big enough vendor to offer enterprise support.

Huh? I guess Red Hat didn’t get that memo. Could something other than vendor size be relevant to a customer’s willingness to pay for enterprise support once an OSS product gets as ubiquitous as MySQL?

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Stacey writes:

“Finally today we announced that Red Hat and Hyperic will be working together on the development of a common systems management platform.

……
As you know, back in 2005 was originally OEMed to create JON before the Red Hat acquisition. At the time, the software licensed was still closed and the software has not been upgraded since, rather JBoss and now Red Hat has been updating the software privately. The new project will update the software contributions from Hyperic to its latest software, contribute the additional code written by the JON team, and work jointly to create a roadmap of future features. And of course make it all open source! (GPL v2)

…….

This new open source project is meant to create a repository of common services to be used in future versions of Red Hat and Hyperic products. Both companies will work to maintain, govern and extend management capabilities within the new open source systems management platform project.”

Now, this is very cool news, and a great endorsement for Hyperic technology. The deal appears to position Hyperic as the de facto systems management provider for Red Hat customers. Choice is great, but it can sometimes work against OSS in the CIO’s mind.

The deal is also an endorsement of Red Hat’s community. Long-time readers may remember that I questioned the “endorsement of the JBoss community” when Exadel decided to move their development into the JBoss community. I questioned the endorsement because there had been funds exchanged, making this an acquisition rather than an endorsement of community A vs. community B.

This agreement, may lead to an acquisition in the future, but today, it’s about one independent company agreeing to join forces and communities with another independent company.

Kudos to Hyperic & Red Hat for making this happen.

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“Sales came in slightly higher than expected, with Red Hat reporting revenues of $127.3 compared to revenues of $99.7 million during the year-ago period. Analysts had expected sales of $125.7 million.

…

Over the past year, Red Hat’s shares have fallen more than 25% as the company has toiled to transform from a Linux vendor into a peddler of a broader array of software.

One big reason: Sales of the so-called application server software Red Hat acquired with its purchase of JBoss last year have disappointed. “The rate of JBoss bookings and revenue growth has not met my expectations,” said Szulik in a conference call with investors. “We know we can do much better.” “

Red Hat Linux is definitely firing on all cylinders. JBoss, in the words of Red Hat’s CEO “could do much better”.

Further comments via CNet:

“However, not all believe the JBoss deal is going swimmingly. Credit Suisse analyst Jason Maynard downgraded Red Hat from “outperform” to “neutral” Monday. “We believe our thesis of improved field execution and meaningful JBoss acceleration won’t materialize and deliver the anticipated upside to our forecast,” he said. “Our checks indicate that the organization continues to be in a state of flux as the company struggles through its transition to a multi-product company.”"

Here’s something I found funny via Reuters:

” Chowdhry of Global Equities Research said the prospects for JBoss were dim because its software was designed to work with the Java programming language. He said Java was losing market share as businesses embrace Ruby, a programming language that is easier to use and works with an open-source rival to JBoss known as Ruby on Rails.”

LOL. RoR is going to kill JBoss…Seriously?!?! If RoR is such a threat, why are other Java app server vendors “doing okay“? Is there something more here? (Hint: yes – I’ll get into it tomorrow).

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The new version (6) of Fedora Core, which became available for download in November, shows that major Linux vendors see the importance of virtualisation and virtual private servers in years to come.

Xen in Fedora Core 6 comes with a GUI named Virtual Machine Manager.

Virtual Machine Manager seems to be easy to use although it seems to be in its young age.

There are some options missing like information about inactive time, options to connect to virtual manager on remote server etc.

Also there is not much feedback when some operations fail to execute. There are not many error, warning or any other messages which might help you trace the root of the problem.

It is obvious that the product still needs much development and it is not uncommon that Red Hat decides to include half-finished products like those in its Fedora Core.

Virtualisation software embedded in Linux distributions is suitable for Virtual Private Server (VPS) providers. But which virtualisation software is embedded in which Linux distros?

Xen has been available in Fedora Core since version 5 and in Suse since version 10.1. Most probably Red Hat will include Xen in its Red Hat Enterprise Linux 5 which has to appear at the end of the year.

It is also worth noticing that some other distribution is offering OpenVZ.

OpenVZ is virtualisation software which is in fact an Open Source testing suite for Virtuozzo.

OpenVZ has started to be available in Gentoo, Mandriva and Debian Unstable. Still, very rarely hosting providers use OpenVZ for offering their VPS. OpenVZ has also been avaiable on Ubuntu since version 6.10.

I’m sure that we will see the importance of Xen and OpenVZ related products in years to come.

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“(while Red Hat) really haven’t gotten in the way”"the R&D really hasn’t benefited from a huge investment, which I was hoping for and was the main reason I went to Red Hat“

[UPDATED 2006-11-27: Eweek has a longer article on the Fleury interview here]

Well, if Marc was looking for an R&D bump, he should have calculated how much more Red Hat spends on SG&A (sales, marketing & administrative) vs. R&D compared to Oracle or other large IT vendors.

If Marc had done this, he’d have thought twice about Oracle.

But maybe he’ll get to experience that also

While JBoss and Red Hat feel each other out and Marc goes to the Red Hat executive team with his tin cup for R&D, the WAS CE team has been making significant strides against JBoss.

According to an Evans Developer Study of Eclipse users released in the summer, WAS CE usage with Eclipse grew from 0% in 2005 to 16%, compared to a growth of 13% to 19% for JBoss.

That’s nearly 3x faster growth for WAS CE than for JBoss.

Oh, and Apache Geronimo usage by Eclipse users grew from 1% use in 2005 to 14%, not bad eh?

Combined, 30% of developers using Eclipse said they developed against Geronimo/WAS CE compared to 19% for JBoss.

Goes to show you what a true open community (Geronimo) and IBM’s R&D efforts (WAS CE) can team up to do together.

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I am taking a semi-break from IBM life as I return to finish a PhD in Industrial Engineering. I’ve held roles in market intelligence, strategy and product management. I’m ex-product manager of IBM WAS Community Edition, and blog about enterprise open source topics.

This relationship is similar to what we see between CentOS and Red Hat already.

CentOS takes RHEL and redistributes it for free. If enough customers of Red Hat were to opt for CentOS instead of RHEL, Red Hat’s revenues would suffer. Hence, Red Hat would cut expenses, including their R&D spending. This could lead to development quality and speed on new feature addition issues inside of RHEL. This, by implication would lead to the same issues within CentOS. As a result, fewer customers would use CentOS, thereby returning the balance between Red Hat and CentOS.

The same scenario applies to Red Hat & Oracle, at least in the near term. That’s why I have a real problem with the likes of Matt Assay crying bloody murder. DISCLAIMER: I don’t like Oracle’s business practices in general. I am incredibly happy that IBM knows how to contribute and participate within the Open Source community and that this is not a move you could really see IBM making. I’m just responding to the outcry from a business and customer standpoint.

From a customer standpoint:

1] If Oracle does a terrible job providing support for RHEL, customers will go (back to) Red Hat. There will be some customer pain while they migrate (back) to Red Hat support, but at least they aren’t locked in.

[2] If Oracle does a great job at it, customers win. (Unlikely if you ask me

[2b] If Oracle wins a lot of (new) customers (from Red Hat) and inhibits the growth of Red Hat, this would cause Red Hat to spend even less on R&D than they do. Now, Oracle has a choice:

• [2b-1] Continue to base their support business on RHEL, even though the lowered R&D spending by Red Hat is resulting in a lower quality product with fewer new features. (Unlikely because this is a do nothing option and customers would lose.)
• [2b-2] Add more Oracle development resources to the Linux development community to make up for the reduced Red Hat R&D. (Likely because we have to assume Oracle will need to add some employees to the community ASAP to help support the unbreakable linux network. Hence, no net negative impact to customers.)
• [2b-3] Oracle acquires Red Hat. (Possible, but not without other large IT vendors jumping in to support Novell SUSE or Ubuntu to ensure that there is more than 1 large IT vendor endorsed/backed Linux distro. No net negative impact to customers.)
• [2b-4] Decide to fork. (Most unlikely, and this would have a negative impact to customers. But on the other hand, maybe it would increase choice for customers.)

[2c] Red Hat’s financial troubles make it an acquisition target for the likes of IBM, HP, Sun, Dell or even SAP. (Possible, but other major IT vendors would act to ensure that choice of Linux distros remains, so no net negative impact to customers).

[3] The Oracle competition just makes Red Hat work even harder at their core Linux offerings, which is where they’ve shown their ability to compete and win. (Most likely

Lots of roads this can take. Lots of possibilities, the majority of which don’t have a large negative impact on customers. It’ll be interesting to see this play out.

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I am taking a semi-break from IBM life as I return to finish a PhD in Industrial Engineering. I’ve held roles in market intelligence, strategy and product management. I’m ex-product manager of IBM WAS Community Edition, and blog about enterprise open source topics.

That sharp whistling sound was that of Red Hat shares dropping in after-hours trading and continuing to plunge when the market opened after the company announced a serious dip in its earnings.

The stock closed at 26.32 before Red Hat revealed its financials on September 26th. Investors did not take the news well, despite revenue growth of 52 percent:

Investors may be taking a harder look at the company’s free cash flow. They may be looking at it too hard, according to comments from a company executive:

Despite Red Hat’s JBoss acquisition providing $7 million in revenue, that $350 million purchase could be part of the disappointing earnings side, MarketWatch reported:

Red Hat is taking the numbers in stride. Said Peters, “Revenue grew nicely and we expect the recent introduction of the Red Hat Application Stack will help continue that trend. We expect operating results and cash flow will improve in the second half of fiscal 2007 since much of the heavy integration work is behind us already.”

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Wake Forest University, the University of Washington, and Vanderbilt University have all signed on to use Red Hat in their computing environments. Red Hat announced those schools were among several that have chosen Red Hat’s Linux distribution and support services for their environments.

Wake Forest opted for Red Hat when it came to building a high-performance computing cluster, as well as supporting some mission-critical applications. One of those applications, Program Link, is coming to the end of a three-year effort to build a cornerstone of Wake’s initiative for a wholly integrated digital campus.

“The University has an extensive collection of computing facilities that serve both academic and business needs,” said Jay Dominick, Assistant Vice President for Information Systems and Chief Information Officer, Wake Forest University. “Red Hat has played a critical role in the upgrade of our information infrastructureThe advantages for us in terms of support, availability and disaster recovery are substantial.”

The University of Washington operates the Center for Computational Biomechanics. Their use of Red Hat to bolster research projects at the Center with a high-performance computing cluster delivered some highly scalable performance increases.

For example, the Center could model a car crash in twelve hours under its former system. Using Red Hat, they have pushed that time down to about one hour to compute the results.

“The implementation of Red Hat Enterprise Linux gives our students the luxury of high performance computing, which, through the full integration of multi-host access, drastically cuts down on stress levels and saves the center time, money and resources while facilitating research discoveries,” said David J. Nuckley, Ph.D., Research Assistant Professor in the University of Washington’s Department of Mechanical Engineering.

At Vanderbilt, Red Hat displaced HP-UX and the rapidly aging HP3000 mainframes with Linux and Intel hardware choices. Data storage needs increased 1,000 percent per year according to Red Hat, and the HP mainframes were not keeping pace.

Considering Intel/Linux versus a new HP system indicated a 60 percent savings for Vanderbilt by opting for Red Hat. “It’s a huge bargain, and when we considered the added benefits of Red Hat’s support assistance with patching, security and the RHN GUI console, we felt we had everything to gain and very little to lose. Ultimately it’s about performance and Total Cost of Ownership (TCO),” said Kevin McDonald, Program Manager for System Administration at Vanderbilt.

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In 1998, the open source world was abuzz with the revelation of the Halloween documents. Penned by a product manager at the behest of management, these memos illustrated the competitive threat Microsoft perceived from the open source community, and suggested an “embrace, extend, and extinguish” approach to Linux.

Fast forward to 2006. Microsoft opened the Boston 2006 edition of LinuxWorld with announcements that, had they been suggested to Jim Allchin eight years ago, may have earned the offending Microsoftie a one-way trip to the parking lot.

Microsoft has decided to make its Virtual Server product available at no cost. The free download from the Virtual Server website for version 2005 RC2 enables multiple operating systems to run concurrently on a single machine.

Today, “multiple operating systems” includes Linux distributions too. The additions to Virtual Server for Red Hat Linux and Novell SuSE Linux have been made available to the public, according to Zane Adam, director of product marketing in the Windows Server Division at Microsoft.

He discussed the release in a Q&A statement from Microsoft, where he cited “virtualization technology as a key stepping stone toward the vision of self-managing dynamic systems.”

Adam also announced the availability of technical support options for customers who choose Virtual Server to host Linux and Linux-based applications:

To summarize this, Microsoft has essentially embraced the open source business model of offering paid support options for a free product, and extended it to Linux. Eight years ago, that would have been unthinkable.

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In October 2005, the information security firm Symantec (NASD:SYMC) complained to European regulators about Microsoft’s (NASD:MSFT) planned bundling of antivirus and anti-spyware software with Vista. Recently, EU antitrust regulators expressed their concerns about Microsoft potentially limiting consumer choices on software.

The company’s CEO Steve Ballmer said in Munich in early October 2005 that Microsoft Client Security represented what business customers wanted – a single solution to security issues.

Now, Microsoft has said it would not bundle antivirus software in Vista. Instead, it will only make its anti-spyware software, Windows Defender, part of the release. Symantec had been concerned that bundled antivirus software would negatively impact its business, the Wall Street Journal said.

In other tech news, Linux distributor Red Hat (NASD:RHAT) dropped 64 cents in intraday trading despite seeing its fiscal fourth quarter’s total revenue leap 37 percent year-over-year to $78.7 million. Red Hat’s fiscal year ended with total revenues of $278.3 million, of which $230.4 million came from subscription revenue.

Apple (NASD:AAPL) announced its response to concerns over the volume settings for its popular iPod media players. A software update permits users to set a maximum volume setting on the device.

“With the increased attention in this area, we want to offer customers an easy to use option to set their own personal volume limit,” said Greg Joswiak, Apple’s vice president of Worldwide iPod Product Marketing.

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