Red Hat touts Linux software, enterprise focus

Fresh from a recent financial restructuring, Red Hat Inc. is going on the offensive in the business computing marketplace by unveiling a new high-end Linux Advanced Server operating system and forging ahead with partnerships to spread the Linux gospel to large companies.

In an announcement on March 26, Raleigh, N.C.-based Red Hat officially introduced what it’s calling its first Linux operating system created especially for the powerful needs of corporate computing.

“Advanced Server is our first product in an enterprise line of products” that will be released in the future, said Mark de Visser, vice-president of marketing at Red Hat. The next step in the evolution of the line will be an enterprise high-end workstation operating system that’s powerful enough for high-intensity uses such as engineering.

The company, de Visser said, is setting out a more detailed road map to fulfil the needs of business IT with a wide range of Linux products and services while maintaining a separate and continuing role as a leader in the traditional Linux development community. By attacking the business market full-bore, Red Hat hopes to increase revenue and find a growing market niche to help it reverse its losses.

Paul Cormier, executive vice-president of engineering at Red Hat, said in a statement that the new server operating system will enable large companies to ease and speed migrations from more costly, proprietary Unix systems to less-expensive Linux running on cheaper Intel-based servers.

“The global enterprise IT market is looking for choice and hard-dollar savings,” Cormier said.

The Advanced Server operating system has support for up to eight processors and includes clustering technologies, high-availability fail-over configurations and data integrity provisions through Red Hat Cluster Manager. Also included is a one-year subscription to Red Hat Network for managed services, secure configuration, asset management and centralized Web-based maintenance. The new product will be available next month, with pricing beginning at US$800 per server.

Analysts say the timing is good.

George Weiss, an analyst at Gartner Inc. in Stamford, Conn., called it “a bold move” that will place a lot of pressure on the company to deliver what it promises to large customers. “Essentially, Red Hat is putting its so-called hat in the ring as a primary Linux enterprise system provider,” he said. “When you market to the large enterprise, you have to have all your marbles together. If there’s any disappointment, you could cause some backlash.”

Weiss said he didn’t expect to see such a widened push for enterprise adoption of Linux so soon from the company but noted that the timing makes sense. “It’s a prime opportunity during hard economic times” because of the lower costs of Linux software and Intel-based hardware, compared with Unix systems, he said.

Also interesting, Weiss said, is that the news comes right after Red Hat reported disappointing fourth-quarter financial results, revealing a net loss of US$41.9 million on revenue of US$18.6 million for the quarter.

Today’s announcement could show the financial world that Red Hat is serious about turning things around, he said.

“The enterprise is where the crown jewels are in showing the investment community that Linux can be a viable model,” Weiss said. By bundling services with the new operating system, Red Hat is immediately increasing its revenue and making good on its goal of using services and support to bring in profits, he said. “This is a big change in strategy here,” he added.

Dan Kusnetzky, an analyst at IDC in Framingham, Mass., said the introduction of a server product tuned and created especially for the enterprise is a good step that lowers Linux’s cost of deployment.

“The idea of preconfiguring makes life a lot easier for IT people who are not familiar with Linux but are familiar with Unix,” he said. “Red Hat seems to know what it wants, and they’re moving in that direction.”

One remaining challenge, though, is how Red Hat will market its products to reach its goal of gaining the interest and orders of large enterprise users, Kusnetzky said. Presently, the company is expanding partnerships with hardware vendors, including Dell Computer Corp., Compaq Computer Corp. and IBM, and with independent software vendors, such as Oracle Corp. and Veritas Software, to gain prospective customers and sales.

Sometimes, though, such arrangements can mean increased sales for products developed by the partners rather than increased sales for a company like Red Hat, Kusnetzky said. “The strategy is interesting,” he said. “We’ll see how it works.”

Bill Claybrook, an analyst at Aberdeen Group Inc. in Boston, said the new server operating system is compelling for high-intensity uses.

By adding key features for business computing needs such as asynchronous I/O capabilities, which allow the server to perform other functions and not have to wait while data reading and writing is done on a disk, the new operating system could be the answer for many businesses in need of high performance at a lower cost, Claybrook said. “They’re pushing ahead more quickly than anyone else in the Linux world,” he said.

In a related announcement today, Dell said it will immediately begin loading the Linux Advanced Server operating system on select models of its multiprocessing PowerEdge servers.

The debut of the advanced server operating system will be kicked off tonight at a product launch and customer event in New York. Joining Red Hat will be representatives from Dell, IBM, Compaq, Oracle, Veritas and other partners, along with newly announced customers, including Inc., America Online Inc., UBS Warburg LLC, Morgan Stanley Dean Witter & Co. and Cisco Systems Inc.