After over a decade of Linux vendors attempting to grow into the enterprise and Red Hat, the poster child for Linux, approaching $1 billion in annual revenue, it’s easy to presume that Linux is pervasive in the enterprise. It is, but, as the Linux Foundation’s enterprise survey finds, there are still some barriers to overcome. Additionally, the survey presents new data showing Windows, not Unix, as the primary operating system for migrations to Linux.

The Linux Foundation recently released the results of a survey with 428 IT professionals from organizations with 500 or more employees, or $500 million in yearly revenue. North America represented 42 percent of the respondents, while Europe and Asia represented 21 and 15 percent respectively.

It’s unclear just how large of a percentage of respondents were sourced from The Linux Foundation’s end user council versus a broader sampling of IT respondents. That said, the survey results bode well for further Linux growth, and serve as a caution for Microsoft.

Linux growth at Windows expense
The survey results show that 84 percent of respondents reported their company’s usage of Linux grew over the past 12 months. Eighty percent of respondents felt that their company will increase Linux use over the next five years.

Alternatively, only 27 percent of respondents stated that their company plans to increase usage of Windows over the next five years.

That’s a 3x higher factor of Linux growth in the enterprise over the next 5 years versus Windows. While this is a great statistic for Linux proponents, it’s difficult to get excited considering the substantially higher market share for Windows vs. Linux in enterprises.

What Linux fans can get excited about, and should be worrisome to Microsoft is where Linux deployments have been coming from.

Over the past 2 years, 39 percent of respondents claimed that their company’s Linux deployments have been migrations from Windows. The comparable number of migrations from Unix to Linux was 35 percent.

Microsoft has often made the claim, one which I’ve repeated, that the growth of Linux was coming at the expense of Unix much more so than from Windows. However, comparing the 3x lower growth rate of Windows versus Linux usage and the virtually equivalent percent of Linux usage growth coming from Windows and Unix migrations, it’s difficult to ignore the impact of Linux on the Windows franchise.

To make matters worse for Microsoft, 69 percent of respondents claimed that Linux would be used for mission critical workloads over the next 12 months.

Management perceptions can be hard to change
When asked about the drivers for adopting Linux, there was a virtual tie between lower total cost of ownership, features/technical superiority and security, with each receiving over 60 percent of respondent selections.

With those results as a backdrop, I found it interesting that 40 percent of respondents claimed that management perception of Linux was impeding further growth of Linux at the company.

It would be great to know what these perception issues are. This is especially true since functionality and security are often held up as areas of concern for open source products in general. And yet, respondents claimed that these were the number two and three reason for adopting Linux over alternatives.

When the Harvard Business Review writes, based on Gartner data, about open source software reaching a tipping point, it’s fair to conclude that the tipping point is well behind us. In the case of Linux, while the tipping point may be a distant memory, historical perceptions about Linux, and maybe open source in general, may yet remain barriers for years to come.

What about you? Is your management still holding on to old perceptions about Linux?

should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.

Recent changes to how Red Hat makes source code to Red Hat Enterprise Linux (RHEL) available have raised the ire of some within Linux and GPLv2 circles. However, the changes are intended to help Red Hat compete more effectively in the enterprise Linux market, which is ultimately good for customers and the Linux community. Find out how the changes may impact your company’s use of Linux.

Increased RHEL copycats compelled Red Hat to action
Since RHEL 6 was released nearly 4 months ago, Red Hat has decided to ship the kernel source code with Red Hat’s selected patches pre-applied. Prior to RHEL 6, Red Hat offered their selected patches separate form the standard Linux kernel available from Prior to the change, interested parties could more easily determine what changes Red Hat had made to the standard Linux kernel?

This seemingly inconsequential shift in packaging has resulted in some Linux advocates questioning whether Red Hat is obfuscating their work. Some have claimed that Red Hat’s new approach adheres to the letter of the law, but not the spirit of the Linux GPLv2 license.

Why is Red Hat taking this new position?

Red Hat CTO and VP of Worldwide Engineering, Brian Stevens, explains:

To speak bluntly, the competitive landscape has changed. Our competitors in the Enterprise Linux market have changed their commercial approach from building and competing on their own customized Linux distributions, to one where they directly approach our customers offering to support RHEL.

Frankly, our response is to compete. Essential knowledge that our customers have relied on to support their RHEL environments will increasingly only be available under subscription. The itemization of kernel patches that correlate with articles in our knowledge base is no longer available to our competitors, but rather only to our customers who have recognized the value of RHEL and have thus indirectly funded Red Hat’s contributions to open source that will advance their business now and in the future.

Having recently met Stevens, I’m reassured that my initial pegging of him as a straight shooter and pragmatic thinker was spot on.

At first glance, it’s hard to believe that RHEL has much to worry about in the enterprise Linux market. Even as Ubuntu grows in cloud deployments and Amazon Linux offers an alternative to RHEL on Amazons’s cloud, RHEL remains firmly in a leadership position. For instance, as this chart from job trends indicates, RHEL skills are is hot demand, and still on a growth trajectory far and above Ubuntu, CentOS, Oracle Linux and Novell SUSE.

However, as Stevens indicates, while RHEL usage and demand for RHEL skills may be increasing, Red Hat is not longer the only vendor in town to offer RHEL support. In fact, third-party vendors that offer lower cost RHEL support than Red Hat offers have the added benefit of not having to invest in developing RHEL, or the RHEL clone, to the degree that Red Hat does. This lower level of investment allows third-party vendors to offer lower cost support than Red Hat.

The long term competitive impacts of lower cost Linux offerings
Some companies are attracted to these lower cost RHEL support providers. However, one must question the value that these third parties deliver to the Linux market, and their impact on paying Red Hat customers, especially in light of Red Hat’s decision surrounding kernel and fix packaging.

It’s well documented that Red Hat invests significantly in Linux community projects. These investments are funded by revenue from RHEL customers. Third party RHEL providers are significantly less active in the Linux community, as is necessitated by their lower investment business model.

Its difficult to argue that the Linux community is better off when a customer willing to pay for RHEL support does so through a third party.

The customer does benefit from lower costs in the short term. But, the long term impact is the risk of a less competitive Linux, unless and until these third party RHEL providers step up their community Linux investments.

While RHEL may have the dominant market share in the enterprise, Red Hat is trailing in areas such as virtualization and cloud deployments. A growing revenue base helps Red Hat, like any vendor, invest in new areas and to close the competitive gap in areas that it’s trailing.

How Red Hat’s new policy may impact your company
Red Hat’s new policy has little, if any, impact on Red Hat customers as NetworkWorld’s Stephen Walli concludes. Walli suggests that the recent negative press about Red Hat’s has blown the situation out of proportion.

If you’re paying for a RHEL clone, don’t be surprised if your costs go up as your vendor’s cost may have a more difficult time keeping in sync with RHEL.  It’s also possible that your RHEL clone provider will have a more difficult time claiming full compatibility with RHEL, thereby making it more difficult to run ISV applications certified on RHEL, but not on your RHEL clone. As a result, your company may be faced with a future decision of continuing to use the RHEL clone with third party support, or moving to Red Hat for support.

I tend to agree with Walli. It’s not only Red Hat’s right to compete, but in the best interests of its customers and the Linux community as a whole.

Follow me on Twitter at SavioRodrigues. I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.”

A prediction in 2009 that Ubuntu usage was going to grow in the face of Red Hat’s Linux operating system dominance could easily have been laughed off. Yet, that’s exactly what Ubuntu has been able to pull off, thanks in part to developers and growing adoption of cloud computing.

Developers, ahead of the Ubuntu usage curve
Like many, I was quite surprised by results from the 2009 Eclipse User Survey which found strong adoption of Ubuntu on developer desktops and production servers alike.

Survey respondents selected Ubuntu on their developer desktops over 3 times as much as Red Hat Enterprise Linux (RHEL) and Fedora combined. While surprising, this result could be explained away by the fact that Ubuntu is free and positioned as a user friendly desktop alternative to Windows. On the other hand, RHEL is a for fee product targeted primarily at deployment servers, not desktops.

However, this reasoning failed to explain the strong usage of Ubuntu on deployment servers.

According to 2009 Eclipse survey results, Ubuntu just barely trailed Red Hat on deployment servers with 12 percent versus Red Hat’s 13.1 percent usage on deployment servers.

According to the 2010 Eclipse survey, Ubuntu usage on the developer desktop had increased to 18.3 percent, from 14.5 percent in 2009. Additionally, Ubuntu usage on deployment servers at 12.6 percent usage narrowly beat out Red Hat’s 12.5 percent usage.

In another data point, RedMonk analyst Stephen O’Grady analyzed data from Hacker News consisting of 1.7 million entries. O’Grady explains:

This dataset is interesting not because it is representative of developers as a whole, but rather because it’s a community of technologists who are collectively ahead of the curve.

O’Grady found nearly 10,000 mentions of Ubuntu versus fewer than 2,500 mentions of Red Hat Enterprise Linux or Fedora combined.

As with many recent trends in the IT industry, developers become ambassadors for products they enjoy using and have quickly become an early indicator for enterprise technology usage in the future.

Another key data point that is working in Ubuntu’s favor is cloud computing. And more specifically, the usage of Amazon’s EC2 cloud. O’Grady’s analysis shows over 25,000 mentions of Amazon/AWS (Amazon Web Services). The next closest cloud provider mentioned in the Hacker News data set is Google with it’s App Engine receiving approximately 3,000 mentions.

Canonical bets on cloud early, leaves Red Hat behind
Canonical’s early focus on cloud computing along with its partnerships with open source cloud vendors such as Eucalyptus helped to establish Ubuntu as the de facto Linux distribution for cloud deployments.

Data from The Cloud Market, which tracks Amazon EC2 cloud statistics, highlights the lead that Ubuntu has over other operating systems on EC2.

Take note of Red Hat’s position on the chart, the lowest line at the bottom. Even when Red Hat usage is combined with Fedora, the result still pales in comparison to Ubuntu usage, the highest line in the chart.

Red Hat is well aware of their position in the cloud computing arena and spent much of 2010 making cloud-related announcements in an attempt to close the gap. Judging by the statistics above, Red Hat’s announcements haven’t translated into significant cloud usage as yet. Interestingly enough, even Windows usage, the green line, has far outgrown RHEL/Fedora usage on EC2.

Ubuntu in 2011
In a seemingly perfect storm, Ubuntu is benefiting from strong developer usage, and the fact that developers are increasingly selecting Amazon’s EC2 cloud platform bodes well for continued Ubuntu success on EC2. As that occurs, IT decision makers will need to consider or reconsider Ubuntu for usage within the enterprise.

Rest assured that Red Hat won’t sit idly by during these discussions.

Watching Canonical/Ubuntu and Red Hat engage to win cloud workloads will be interesting to track in 2011. Can the upstart keep up its growth trajectory? Or will the gorilla be able to convert its enterprise market share into cloud workload share?

Follow me on Twitter at SavioRodrigues. I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.”

While Red Hat’s leadership in the enterprise Linux market is without question, questions have been raised about Red Hat’s inability to retain its “market leader” position in the growing public cloud market. Growth prospects for Red Hat Enterprise Linux (RHEL) were delivered yet another hurdle as Amazon announced its own Linux AMI.

IT decision makers considering cloud investments should understand Amazon’s Linux AMI offering and its pricing versus Red Hat’s cloud offerings and pricing.

Amazon’s RHEL-compatible Linux
After some discussion it was uncovered that Amazon’s newly announced Linux AMI is in fact based on CentOS, which in turn is based on RHEL.

It’s interesting to note that Amazon’s entry into Red Hat’s market, using a RHEL-variant has not been met with the negative press that Oracle faced when they announced a RHEL-compatible Linux OS. Perhaps, it’s because Oracle was going after the enterprise, which has been Red Hat’s turf, while Amazon is going after the cloud OS arena, where Red Hat has yet to establish itself versus Ubuntu.

Amazon explained the impetus for this new offering:

Many of our customers have asked us for a simple starting point for launching their Linux applications inside of Amazon EC2 that is easy to use, regularly maintained, and optimized for the Amazon EC2 environment. Starting today, customers can use Amazon Linux AMI to meet these needs.

Amazon further detailed some of the benefits of using the Amazon Linux AMI, versus, for instance using another Linux AMI available on Amazon EC2 or building one’s own Linux AMI:

The Amazon Linux AMI is a supported and maintained Linux image provided by Amazon Web Services for use on Amazon Elastic Compute Cloud (Amazon EC2). It is designed to provide a stable, secure, and high performance execution environment for applications running on Amazon EC2. It also includes several packages that enable easy integration with AWS, including launch configuration tools and many popular AWS libraries and tools. Amazon Web Services also provides ongoing security and maintenance updates to all instances running the Amazon Linux AMI. The Amazon Linux AMI is provided at no additional charge to Amazon EC2 users.

Why Red Hat should be concerned about Amazon’s Linux AMI
IT decision makers should take note of two key related points.

First, the Amazon Linux AMI is provided at no charge for Amazon EC2 users beyond the per hour infrastructure charge, which starts at $0.085 per hour.

Second, Amazon is offering support for the Amazon Linux AMI through AWS Premium Support, which starts at the greater of $100 per month or $0.10 per dollar of total monthly AWS charges.

Contrast this with Red Hat’s pricing options for Amazon EC2.

Existing Red Hat customers that qualify have the option of repurposing existing unused RHEL entitlements on Amazon EC2. According to Red Hat, in order to qualify, a customer must, amongst other requirements:

Have a minimum of 25 active subscriptions and move only not currently used Red Hat Enterprise Linux Advanced Platform Premium and/or Red Hat Enterprise Linux Server Premium subscriptions and have a direct support relationship with Red Hat.

New or existing Red Customers also have the option of using the Red Hat Enterprise Linux Hourly Beta, which is priced at $19/month plus $0.21/hr, which is in addition to Amazon’s EC2 infrastructure charge.

According to Red Hat, RHEL Hourly Beta customers receive “Support for the Hourly Beta offering includes two-day, business-hour response and email-only support”. This level of support is equivalent to a RHEL Basic Subscription – priced at $349 per year, which translates to $0.040 per hour.

It’s interesting that Red Hat has opted to charge over 5 times as much for RHEL Hourly Beta as a customer deploying RHEL would pay for an equivalent level of support in a traditional datacenter deployment. On the other hand, this leaves Red Hat plenty of room to revise their pricing as the RHEL Hourly offering moves from Beta to generally available status.

Next, let’s compare Red Hat’s RHEL Hourly Beta pricing versus using the Amazon Linux AMI with AWS Premium Support. A customer wishing to run more than 16 days, or 386 hours, a month of RHEL workload on Amazon EC2 could achieve a lower cost through the Amazon Linux AMI.

With Amazon’s entry into the Linux OS market, enterprises now have the ability to run a RHEL-compatible Linux distribution with support from a trusted vendor for as little as $100 per month.

It will be interesting to watch Red Hat respond. As shown above, Red Hat’s current RHEL price premium for cloud environments is large enough that it could potentially be decreased to address competitive price pressure.

Follow me on Twitter at SavioRodrigues. I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.”

Reports of Dell’s decision to deliver Ubuntu-powered cloud infrastructure should motivate readers to evaluate Ubuntu as an alternative to Red Hat in the cloud.

Red Hat still stuck in cloud positioning mode:
Just two months ago I wrote about challenges with Red Hat’s Cloud strategy as being focused on retaining existing customers, not attracting new customers. Red Hat has since attempted to paint itself as the leader for cloud software, singling out VMware as its primary competitor going forward. However, it’s important to note that the new positioning doesn’t address the barrier to entry that I noted in my previous post.

InfoWorld blogger David Linthicum highlights an issue that Red Hat and other software vendors are facing as they consider cloud computing offerings and price points. David writes:

For instance, if you’re selling cloud storage at 15 cents per gigabyte per month, but your customers end up spending $1 per gigabyte per month for your storage box offering, how do you suspect your customers to react?

David’s example is focused on storage, but equally applies to the per hour cost of running an operating system, such as Red Hat Enterprise Linux (RHEL), on a public cloud versus in your data center.

Cloud pricing encourages customers to “price check” the yearly cost of a traditional software license or subscription versus the pay-per-usage cloud price for the equivalent software.

Ubuntu’s cloud growth:
Stemming from Canonical’s relatively modest customer base, especially outside of cloud deployments, the vendor behind Ubuntu doesn’t have to worry about existing customers doing a similar price comparison across pay-per-usage and traditional support subscriptions. This is definitely an advantage for Canonical over Red Hat.

Ubuntu’s usage on Amazon EC2 and Canonical’s claim of 12,000 downloads of the Ubuntu Enterprise Cloud are further evidence of Ubuntu as a viable alternative to Red Hat in the cloud Linux and virtualization arena.

Additionally, Canonical looks to have scored a coup with Dell selecting Ubuntu as the operating system and virtualization infrastructure for Dell’s forthcoming cloud servers. As The Register’s Gavin Clarke reports, these servers come out of Dell’s Data Center Solutions Group, whose servers power online properties such as Bing and

Why Dell chose to work with Canonical, and not Microsoft or Red Hat on these servers is a moot point. Dell may in fact have similar plans with Microsoft, and maybe even Red Hat. What’s important is the vote of confidence in Ubuntu and Canonical.

Readers will point out that Dell’s history of supporting Linux is less than stellar. However, it’s important to note that the PC and server markets are very different. Linux share on PCs versus servers means that Dell can’t ignore the 30 percent of the server market seeking Linux solutions.

Heterogeneous data center & cloud environments:
Selecting Ubuntu for cloud deployments in conjunction with Red Hat Enterprise Linux or Novell SUSE Linux Enterprise for traditional data center workloads does introduce yet another environment to support. For some, the added complexity of yet another Linux environment to support means Red Hat, and Novell, have an opportunity to close the gap to Ubuntu in cloud deployments. For others, using Ubuntu in cloud deployments, regardless of their data center Linux selection, is a competitive differentiator, and a negotiation tactic against Red Hat or Novell in the data center. Where does your company land on this spectrum?

Follow me on Twitter at SavioRodrigues. I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.”

While a niche offering today, open source Chrome OS is likely to follow Android’s success – and IT decision makers should plan on evaluating Chrome OS-based devices for at least some portion of their user base in the next twelve to eighteen months.

As PC World’s Ian Paul reported earlier this week, Dell revealed it is planning to utilize Chrome OS as the basis for future offerings. Details surrounding Dell’s Chrome OS plans, and more importantly, Google’s offer to PC makers, are still murky at best. However, it’s likely that Google will follow much of the same game plan as they did with Android.

Less than Free for PC makers is difficult to ignore:
Most readers are aware that the open source Android operating system is provided royalty free to device manufacturers. However, Google goes one step further – device manufacturers are actually paid to adopt the OS. VC Bill Gurley explains Google’s offer to mobile device manufacturers:

“….That’s right; Google will pay you to use their mobile OS. I like to call this the “less than free” business model. This is a remarkable card to play. Because of its dominance in search, Google has ad rates that blow away the competition. To compete at an equally “less than free” price point, Symbian or windows mobile would need to subsidize. Double ouch!!”

I would be surprised if Google doesn’t provide a similar offer for PC manufacturers to encourage the delivery of Chrome OS-based devices.

But Google is unlikely to stop there.

After the operating system itself, most IT decision buyers focus on is choosing an office productivity suite that meets their business needs, and employee skills. As this chart of Microsoft’s profit shows, the linkage, and combined success, of Windows and Microsoft Office is critical to Microsoft’s business.

Until recently, few could argue that MS Office alternatives were truly ready for everyday use. That is slowly changing – Google’s free SaaS-based Google Docs are increasingly becoming more enterprise ready by the week. In some respects, especially joint live editing within documents, Google Docs offers capability that many users of older Office versions would love to utilize.

According to Microsoft’s Office 2010 OEM pricing, Microsoft is charging PC manufacturers $2 per copy to preload Microsoft Office Starter Edition if they agree to preload other Microsoft components. The cost increases to $5 per copy if the manufacturer only wants to preload Office Starter Edition.

Google can offer Google Docs for free to PC manufacturers, thereby saving the manufactures millions in the long term versus Microsoft licensing fees for MS Office preloads. Google could potentially offer PC manufacturers incentives related to Google Apps users that upgrade to Google Docs on a given Chrome OS-based device. The net result will be higher profit margin potential for PC manufacturers considering Google Chrome OS and Google Docs.

Astute readers will note that the potential success of Chrome OS is poised to negatively impact Microsoft and desktop Linux vendor revenues.

One could question whether Chrome OS and Google Docs can in fact succeed against Microsoft Windows and Microsoft Office where so many other vendors have failed. The combination of Chrome OS plus Google Docs/Apps provides an interesting user experience that sets the combination apart from previous OS and office productivity alternatives. However, the most important factor is the profit motivation for PC makers. For instance, vendors offering desktop Linux or open source office productivity suites, can at best, provide a free offering to build from. These vendors cannot offer the revenue potential linked to search revenue that Google can offer. The “less than free” price point is difficult to ignore, and for other smaller OSS vendors, compete against.

Choose roll out candidates with caution:
Driven by PC maker’s profit motives, IT buyers need to plan for the inevitable future where some portion of their user base will be well served with a Chrome OS-based device.

In some respects, the growing trend towards Web-based applications makes is increasingly easier to move some users off a traditional OS and fat-client applications. For instance, of the eight applications I am currently running in the background as I write this post, there are exactly zero applications that either do not, or could not, run inside of a browser alone. I am not alone in this respect.

To be fair, and sane, few IT decision makers will roll out a Chrome OS and Google Apps-based PCs across their entire enterprise in the next twelve to eighteen months. The lack of enterprise manageability and control with Chrome OS is more than likely to be missing when these devices first hit the market. But that is a point in time statement.

IT decision makers should consider initial roll outs to specific groups, such as external facing customer service representatives, or within branch offices. Consider a pilot project with Chrome OS and Google Docs, or Google Apps, on existing, older, PCs to evaluate whether a future Chrome OS PC will be a good fit for some of your user base.

Plan ahead now – because if Chrome OS tracks Android adoption, at the manufacturer and user levels, you’ll be forced to into the evaluation by your vendors, and maybe even your users.

Follow me on Twitter at SavioRodrigues. I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.”

Red Hat’s cloud strategy appears focused on retaining existing customers, not attracting new customers.

There’s little argument that Red Hat is the undisputed leader in the enterprise Linux market by the measure that counts most, revenue. However, Red Hat’s position as the leading Linux vendor for cloud workloads remains in dispute at best, and far from reality at worst. All signs point to Ubuntu as the future, if not current, leader in the Linux cloud workload arena.

First, data from the Ubuntu User Survey decidedly points to Ubuntu’s readiness for mission critical workloads, with over 60 percent of respondents considering Ubuntu a viable platform for cloud based deployments.

Second, statistics taken from Amazon EC2 and synthesized by The Cloud Market, clearly point to Ubuntu’s leading position against other cloud operating systems in EC2 instances today.

With these facts in hand, once could have expected Red Hat to take steps to grow Red Hat Enterprise Linux (RHEL) adoption in cloud environments. In fact, Red Hat’s Cloud Access marketing page boldly claims:

“Red Hat is the first company to bring enterprise-class software, subscriptions, and support capabilities all built in to business and operational models that were designed specifically for the cloud.”

However, Red Hat announced a program in which existing customers, or new customers willing to purchase, at least 25 active subscriptions of RHEL Advanced Platform Premium or RHEL Server Premium could deploy unused RHEL subscriptions on Amazon EC2. With the minimum support price of $1,299 for RHEL Advanced Platform Premium, and a minimum of 25 subscriptions, the price of entry is $32,475. Well, you’ll actually need at least 26 subscriptions, so you can move subscription number 26 to Amazon EC2 with full 24×7 Red Hat support. As such, the price of entry is $33,774. I’m assuming that customers have to pay the full cost of Premium support per year even if the Amazon EC2 instance is not running 24x7x365. If it were otherwise, one would expect Red Hat’s marketing page to point out this nice feature. Additionally, once a customer elects to move an unused RHEL subscription to the Amazon EC2, the subscription must remain there for a minimum of six months according to current eligibility guidelines.

These requirements seem at odds with the low cost of entry, ease of trial, selection and disposal, and pay-per-usage of software and hardware on public cloud infrastructure.

The other alternative is to use the beta of Red Hat Enterprise Linux on Amazon EC2 for a Basic EC2 server. This hourly beta offering provides unlimited email support with 2 business day response time at a cost of $0.21 per hour. This is a much easier way for customers new to RHEL to try it out in a cloud environment. If a customer decided to deploy cloud workload on RHEL requiring 24×7 support, they would however be faced with the $33,774 price of entry calculated above.

I wouldn’t be surprised if Red Hat, and frankly, other software vendors, try several different pricing models before finding the approach that balances the vendor revenue potential from licenses deployed in customer’s datacenters with the flexibility and freedom of pay by usage pricing in the cloud.

Follow me on twitter at: SavioRodrigues

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

After my previous post “Cloud to boost proprietary software use?”, Tim Bray questioned whether the pricing comparison of “WebSphere/SUSE vs. JBoss/RHEL on EC2 was a transient anomaly”. JBoss’ Rich Sharples commented that I was comparing apples and oranges.  That was not my intention.  I simply picked the only two application server Amazon Machine Images (AMIs) that I could easily find pricing for.  And in retrospect, my intention was not to compare proprietary versus open source pricing in the cloud.  But rather to compare the price differential of proprietary versus open source products in the cloud versus on-premise.

Let me try again with Windows versus Linux.  Specifically, I looked at the price of Windows Server 2008 R2 versus Red Hat Enterprise Linux (RHEL) on-premise and on Amazon’s Elastic Compute Cloud (EC2).  I wanted to evaluate how, if at all, the Windows price premium differs on-premise versus in the Amazon cloud.  One can argue that “you need 2 Windows servers to do the work of a RHEL server.” Such an argument has no impact on this analysis.  If you do in fact need 2, or a higher number of Windows servers per RHEL server, this ratio would hold equally well on-premise or on Amazon EC2.

Here’s what I found:

On-premise license:
Windows Server 2008 R2 Datacenter Edition: $2,999
Windows Server 2008 R2 Enterprise with 25 Client Access Licenses: $3,999
Red Hat Enterprise Linux Premium Subscription for 1 year: $1,299
Windows price premium: 130% to 208% [See UPDATE below]

Amazon EC2 license on Standard-Small AMI:
Windows Server 2008 R2:  $0.12/hr
Red Hat Enterprise Linux: $0.21/hr plus $19/month per customer
Windows Price premium: -43% [See UPDATE below]

If you’re surprised that the Windows Server AMI is 43 percent less expensive per hour than the RHEL AMI raise you hand [See UPDATE below].

Maybe you think I’ve missed some important or potentially hidden costs for the Windows AMI.  I may have. I’m by no means an operating systems licensing expert.  However, it’s difficult to accept that these costs would add up to Windows being 130% to 208% premium priced versus RHEL on EC2.  Even if I’ve missed a pricing component that doubles the “true” price of a Windows AMI in a production setting, that would roughly put Windows and RHEL at par in terms of EC2 per hour pricing.  That’s a far cry from the 130 percent to 208 percent premium for Windows over RHEL in an on-premise environment.

Hat tip to William Vambenepe for astutely pointing out that the license cost differential between proprietary and open source products narrows in the cloud.

[UPDATE:  2009-12-11 @ 5:45p EST — PLEASE Read]

Based on public & private comments here is some new information for readers:

1] The version of RHEL on EC2 is supported by Red Hat at the Red Hat “Basic Subscription Web support” level.  This includes  2 business day response, and unlimited incidents.  Red Hat charges $349/year for this license.  As previously mentioned the equivalent RHEL AMI (with an equivalent level of support) is $0.21/hr plus $19/month.

2] The version of Windows 2008 offered on EC2 is Microsoft Windows 2008 Datacenter R1 SP2 64-bit. The AMI is not supported as part of the $0.12/hr AMI fee.  However, to receive an equivalent level of support for this AMI as Red Hat offers for the RHEL AMI, customers can purchase the AWS Premium Support at the Silver level.  The AWS Silver Premium level support is $100/month, or the equivalent of $0.14/hr. Alternatively, to receive 24×7 support for this Windows AMI, customers could purchase the AWS Gold Premium level of support for $400/month, or the equivalent of $0.55/hr.

3] The price comparison now becomes:

On-premise license:
Windows Server 2008 R2 Datacenter Edition: $2,999
Red Hat Enterprise Linux Basic Subscription for 1 year: $349
Windows price premium: 759%

Amazon EC2 license on Standard-Small AMI:
Windows Server 2008 R2 ($0.12/hr) with AWS Silver Premium support ($0.14/hr):  $0.26/hr
Windows Server 2008 R2 ($0.12/hr) with AWS Gold Premium support ($0.55/hr):  $0.67/hr
Red Hat Enterprise Linux with Basic Subscription: $0.21/hr plus $19/month per customer
Windows Price premium: 23% to 219%

Key point to take away:
Holding the product version and support level constant across an on-premise license and Amazon EC2 instance, the price premium of Windows vs. RHEL, if X% for on-premise, will be less than X% on the Amazon cloud.  Said differently, the license cost differential between proprietary and open source products narrows in the cloud.


Follow me on twitter at: SavioRodrigues

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

See update at the bottom of this post.Based on public & private comments here is some new information for readers:

1] The version of RHEL on EC2 is supported by Red Hat.  The support level is: “Basic Subscription Web support, 2 business day response, and unlimited incidents”.  Red Hat charges $349/year for this license.  As previously mentioned the equivalent RHEL AMI is $0.21/hr plus $19/month.

2] The version of Windows 2008 offered on EC2 is Microsoft Windows 2008 Datacenter R1 SP2 64-bit. The AMI is not supported as part of the $0.12/hr AMI fee.  However, to receive an equivalent level of support for this AMI as Red Hat offers for the RHEL AMI, customers can purchase the AWS Premium Support at the Silver level.  The Silver level support is $100/month, or $0.14/hr.

3] The price comparison now becomes:

On-premise license:
Windows Server 2008 R2 Datacenter Edition: $2,999
Red Hat Enterprise Linux Basic Subscription for 1 year: $349
Windows price premium: 759%

Amazon EC2 license on Standard-Small AMI:

Windows Server 2008 R2 ($0.12/hr) with AWS Silver Premium support ($0.14/hr):  $0.26/hr
Red Hat Enterprise Linux with Basic Subscription: $0.21/hr plus $19/month per customer
Windows Price premium: 23%

But follow the niche alpha geek adoption carefully.

As with anything Google does, opinion ranges from revolutionary to lackluster.  Personally, I think it’s too early to tell.  More importantly, I think the success of Chrome OS won’t be based on the success of version 1.0.  Google has the uncanny ability to generate and maintain interest even in the face of negative initial reviews.

Chrome OS will be limited to netbooks, and more importantly, new netbooks that Google approves. Chrome OS is theoretically competition for Windows and Linux which represent approximately 80% and 20% of the operating system market for netbooks.  But Windows and Linux on netbooks allow a degree of user freedom that Chrome OS doesn’t.  Users can store files, be it pictures, songs, videos, spreadsheets, etc. on the netbook.  These files can be loaded, edited and saved with or without a network connection.  Chrome OS on the other hand, requires a network connection to access user files which are stored in the Google cloud.  This will be an impediment to Chrome OS adoption by average netbook consumers.  Rational or not, the fear of needing to get at files “in the cloud” but not having a Wifi/3G connection will diminish the allure of a netbook that starts in under 7 seconds to regular users.

On the other hand, geeks will be chomping at the bits to pick up a Chrome OS netbook to try out during the 2010 holiday season.  Yes, the “geek” audience is without a doubt a niche market.  So it’s easy for Microsoft or Apple to write off Chrome OS.  But that’s a mistake. As John Gruber wrote in his excellent piece, “Microsoft’s Long, Slow Decline“:

“People who love computers overwhelmingly prefer to use a Mac today. Microsoft’s core problem is that they have lost the hearts of computer enthusiasts. Regular people don’t think about their choice of computer platform in detail and with passion like nerds do because, duh, they are not nerds. But nerds are leading indicators.”

Microsoft’s losses to Apple aren’t based on “regular people” choosing the Mac.  Rather, these “regular people” were encouraged to do so by the geeks in their lives who had made the switch to a Mac years ago.  Consumer technology vendors can ignore the alpha geek niche at their peril.

Truer words of caution couldn’t be said to Apple, Microsoft and Linux desktop vendors in the face of Google Chrome OS.

Follow me on twitter at: SavioRodrigues

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

It appears that a portion of Microsoft’s “Windows 7” training materials have been released into the wild by a BestBuy employee.  Why is this news?  Well, a section of the training compared Windows 7 to Linux.  The education material provided information that could help better position Windows 7 versus Linux.

You can view the Windows 7 training screen shots related to Linux here.

The Windows vs. Linux comparison material is likely defendable, but does not paint Microsoft as the open source enlightened company that they’d like to become, or at least be viewed as.  I should clarify “likely defendable”.  Most of the screen shots are, in my view, accurate.  It’s difficult to argue that any other OS has broader support for printers, digital cameras, video cameras, applications or games than Windows.

On the other hand, it is easy to argue with claims that:

“There’s no guarantee that when security vulnerabilities are discovered, an update will be created. Users are on their own.”

Or that Linux does not have “Authorized support”.

These claims are accurate if you’re comparing versus an unsupported community distribution of Linux.  But these claims are plain wrong if you’re comparing versus a supported Ubuntu or Red Hat Enterprise Linux Desktop.

Microsoft could have handled this potential for misinformation by adding another column for “Supported Linux” or adding a note at the bottom of each table.

Now here’s the surprising thing.  BestBuy doesn’t sell Linux machines.  So why in the world would Microsoft want to provide this information to BestBuy sales representatives?  I understand that these types of marketing enablement material is created once, and used essentially as-is for several audiences.  Some of Microsoft’s sales channels certainly also sell Linux machines.  Hence, this education was intended for them, and not necessarily BestBuy.

Note to Microsoft; tailor these materials by audience in the future.  Or even better, don’t deliver marketing enablement for certain audiences that you wouldn’t feel confident publishing on your public website.  This applies to Microsoft as much as any vendor.

What I don’t understand is why Microsoft is even putting Windows 7 on the same page as desktop Linux.  This may be a comparison that I or other open source proponents want to see.  But it’s not a comparison that typical PC buyers consider.  Why isn’t OS X in that comparison table?  Shouldn’t Microsoft be comparing with the operating system that PC buyers consider to be comparable, if not superior, to Windows 7? Maybe that was another section of the training material?

Follow me on twitter at: SavioRodrigues

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

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