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.

With Microsoft’s Windows Azure striving for greater relevance and adoption, a relatively unknown vendor, Tier 3, is providing a cloud alternative for Microsoft .NET applications. Tier 3 is using VMware’s open source code as the basis of its offering, which opens the door for direct competition amongst VMware and Microsoft for .NET cloud workloads in the future.

Tier 3’s .NET play
Colleague J. Peter Bruzzese recently provided an update on new pricing, open source support and a free trial of Windows Azure. Support for Node.js and Apache Hadoop for Azure are sure to attract the developer attention. Whether the attention, and the free trial, will turn into paying users is an open question. That said, Azure remains the leading cloud destination for Microsoft development shops seeking a platform as a service offering. That’ll change if Tier 3, and maybe VMware, has a say.

Tier 3 recently open sourced Iron Foundry, a platform for cloud applications built using Microsoft’s .NET Framework. Iron Foundry is a fork of VMware’s Cloud Foundry open source platform as a service. According to Tier 3,

we’ve been big supporters of Cloud Foundry–the VMware-led, open-source PaaS framework–from the beginning. That said, we’re a .NET shop and many of our customers’ most critical applications are .NET-based.

It seems to have been natural to start with the Cloud Foundry code and extend it to support .NET. Tier 3 is continuing its efforts to better align elements of the core Cloud Foundry code to better support Windows using .NET technologies in areas such as command line support on Windows, which Cloud Foundry supports through a Ruby application. Tier 3 is also working with the Cloud Foundry community to contribute elements of Iron Foundry back into Cloud Foundry and into other the Tier 3 led open source project.

Tier 3 offers users two routes to use Iron Foundry. Open source savvy users can download the Iron Foundry code from GitHub under the Apache 2 license and run it as they wish. Alternatively, users can use a test bed environment of Iron Foundry for 90 days at no charge. The test bed is hosted on Tier 3’s infrastructure. Pricing for the hosted offering has not been released. This should raise some concerns about committing to a platform prior to knowing what the cost will be as I’ve discussed before.

VMware’s path to .NET support
It’ll be interesting to see how Microsoft and VMware react to Iron Foundry over time. VMware appears to have the most to gain, and least to lose with Iron Foundry.

Since Iron Foundry is a fork from Cloud Foundry, there’s just enough of a relationship between the two that VMware can claim .NET support with Cloud Foundry. In fact, VMware can claim the support with very little direct development effort themselves, obviously a benefit of their open source and developer outreach strategy around Cloud Foundry.

VMware could, at a later time, take the open sourced Iron Foundry code and offer native .NET support within the base Cloud Foundry open source project and related commercial offerings from VMware. Considering that Microsoft is aggressively pushing HyperV into VMware ESX environments, there’s sure to be a desire within VMware to fight into Microsoft’s turf.

On the other hand, Iron Foundry is a third party offering, over which VMware holds little say. If it falls flat against Windows Azure, VMware loses very little, and didn’t have to divert its development attention away from their Java-based offerings on Cloud Foundry.

Microsoft on the other hand faces the threat of Iron Foundry attracting developer attention away from Windows Azure. Until now, Microsoft has been able to expand Windows Azure into areas such as Tomcat, Node.js and Hadoop support without having to worry about its bread and butter offering, support for .NET based applications in the cloud. Having to compete for .NET application workloads will take resources away from efforts to grow platform support for non-Microsoft technologies on Windows Azure.

Request details from Tier 3 and VMware
As a user, the recommendation to understand pricing before devoting time and resources holds true for Tier 3’s offering. The added dynamic of and established vendor like VMware potentially seizing the torch, either by acquisition or a competitive offer, from Tier 3, could prove attractive to some .NET customers seeking an alternative to Windows Azure.

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

Windows 8 demos at Microsoft’s BUILD developer and partner conference have been very compelling, inspiring even. But nothing about the UI will change the underlying challenges with Microsoft’s open ecosystem. Users will still have to deal with frustrating experiences, even if the blue screen of death is replaced with a blue frowny face.
Windows 8 looks promising
Our own Galen Gruman’s review of Windows 8 is quite glowing. Galen goes out on a limb and suggests that HP’s decision to jettison WebOS could have been due to Windows 8:

But if Windows 8 is nearly as good as the demos look, Microsoft could very well win the mobile wars, despite years of failures in Windows tablets and mediocre smartphone efforts. If Hewlett-Packard CEO Léo Apotheker had seen a preview of Windows 8 tablets, that would explain why he suddenly killed the WebOS-based TouchPad tablet last month.

Other reviews of Windows 8 have been cautiously optimistic that Microsoft may finally have an OS to combat Apple.

The only problem, software alone is not enough. The real test for Microsoft is how Windows 8 will demo on the hundreds or thousands of devices, PC and mobile, that will be “optimized” to run Windows 8. I stress optimized, because every hardware vendor will play that card, when in fact, no piece of software can be optimized for everything. That’s where marketing and reality depart.

Configurability versus design choices
John Gruber wrote a thought provoking post about Apple’s long term sustainable advantage residing not solely on their design, but their supply chain. The two points are related, and will impact Microsoft’s windows 8 strategy, especially as they grow beyond the desktop to tablets and mobile devices with a single operating system.

Gruber wrote:

Design is largely about making choices. The PC hardware market has historically focused on three factors: low prices, tech specs, and configurability. Configurability is another way of saying that you, the buyer, get a bigger say in the design of your computer. (Bright points out, for example, that Lenovo gives you the option of choosing which Wi-Fi adaptor goes into your laptop.) Apple offers far fewer configurations. Thus MacBooks are, to most minds, subjectively better-designed — but objectively, they’re more designed. Apple makes more of the choices than do PC makers.

I’ve been thinking of this more and more as part of my day job, and I can fully understand why making choices are hard for vendors. Clients tell us that they want to make choices, because a lack of choice can sometimes lead to vendor lock-in. But these same clients demonstrate higher satisfaction with products which have been, in Gruber’s words, more designed, and hence present fewer choices to buyers.

Microsoft’s issue with Windows is that their OEM partners offer a degree of configurability that, on the surface is helpful, but turns out to hurt user satisfaction with both Windows and the hardware OEM.

I hadn’t made this connection until I started to use Windows 7 in a VMware Fusion virtual machine on a new MacBook Air. Yes, I know, the horror. But I need to use Windows for work and will be travelling with the need for my work and personal machine. This was easier than lugging around two physical machines.

Even with the overhead of a hypervisor and the relatively mediocre Intel core i5 CPU, my work hypervisor, is a delight to use. I’ve had no issues with driver mismatches or blue screens of death. Windows startups, shutdowns and resume from sleep are speedy, thanks to the SSD drives. I actually like using Windows again. More importantly, my PC is no longer getting in the way of my productivity.

For once, a hardware provider that’s actually enhancing satisfaction with Windows. Unfortunately, Apple isn’t a Microsoft hardware partner.

What’s Microsoft to do?
It’s difficult to know how Microsoft will address this issue going forward.

Microsoft could get very, very, restrictive about configurations and testing before allowing hardware OEMs to use Windows 8. This would require the same level of testing for fixes and upgrades to drivers used by the hardware configuration. However, considering the billion odd users of Microsoft Windows, with vastly different amounts to spend on PCs, a very restrictive policy will be at odds with Microsoft’s business goals.

Increased restrictions could encourage Windows OEMs to build with Linux OS, or more likely, Google’s Chrome OS. Microsoft is in a difficult spot of being the undisputed market share leader, but at risk of market share loss to Apple at the high end and Chrome and Linux at the low end. Until recently, the high end and low end competition was theoretical at best, but no longer.

It’ll be interesting to see what Microsoft and its partners will do if Apple uses its supply chain and lower configurability to offer a much lower price point entry to their desktops and laptops. In some respects, the iPad is doing just this as it eats into existing PC share.

Whether Windows 8 will be enough to stop the share loss is an open question. The real question however is how well Windows 8 will be configured and optimized for the hardware you’ll be asked to buy. Keep that in mind as you purchase new machines for your teams and employees.

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

Lync, Microsoft’s unified communications platform, combining voice, web conferencing and instant messaging, is reportedly poised to become the next billion dollar business at Microsoft. It’s time you considered alternatives before Lync becomes engrained in your IT environment, much like SharePoint has for many companies.

Lync follows in SharePoint’s billion dollar footsteps
According to reports from Microsoft’s Worldwide Partner Conference (WPC) 2011, the company has high expectations for Lync, with several Microsoft managers telling editorial director of MSPmentor, Joe Panettieri, that Lync’s sales trajectory will make Lync Microsoft’s next billion dollar platform.

With Lync, formerly Office Communications Server, Microsoft is following a similar strategy to Microsoft’s SharePoint, another billion dollar plus business.

With Lync, as with SharePoint before it, Microsoft has built a set of applications that leverages Microsoft Office’s massive install base. Microsoft is now accelerating partner involvement to shift Lync from a set of applications to a platform that partners can manage and customize.

Microsoft expects to target the 10 million legacy voice over IP (VoIP) phone lines that Cisco currently controls, largely in the enterprise space. However, as Panettieri explains, Microsoft has the install base and partner channel to grow Lync in the small and medium business market.

Lync is available on the Office 365 cloud, but is expected to garner higher on premises interest, an attractive point for Microsoft’s managed service provider partners, driven by a more complete feature set on premises.

Consider alternatives before Lync arrives at your door
Lync only furthers your company’s reliance on Microsoft Office – a smart strategy for Microsoft.

As Microsoft partners get more involved with Lync, you’ll be getting briefings on the benefits of Lync in your business. Now would be a good time to start considering alternatives, especially a few in the open source arena, to be ready for Lync conversations with your friendly neighborhood Microsoft partner.

As Lync is growing by selling into the Microsoft Office install base, the first alternative to consider is Google Apps, a direct cloud competitor of Microsoft’s Office 365. While Google doesn’t yet offer a PBX, OnState Communications offers a cloud-based PBX that from the Google Apps Marketplace. It also stands to reason that Google will add some degree of PBX capabilities into Google Apps.

Twilio, a self purported cloud communications vendor, offers a platform to build voice and SMS applications using simple to use APIs. Twilio also offers an open source phone system through its OpenVBX offering. Twilio is targeted at developers while Lync is a ready to use platform for companies. However, systems integrators or managed service providers could take the Twilio APIs and build a repeatable solution that offers much of Lync’s capabilities.

While several open source PBX phone systems are available, the open source Asterisk project is by far the best known. Companies could consider Asterisk as a piece of a Lync alternative. However, Asterisk, as a PBX product, does not itself offer the full platform for voice, web conferencing and instant messaging as yet.

Perhaps the best alternative to Lync, especially for small and medium sized business, is a unified communications offering from the likes of Cisco or Avaya.

Earlier this year Cisco announced the Cisco Unified Communications 300 Series, aimed at companies with up to 24 employees. Cisco also offers the Cisco Unified Communications Manager Business Edition 3000, for companies with up to 300 users.

It would be interesting for a Cisco competitor, such as Avaya, to acquire Twilio and build a customer and developer friendly offering that rivals Cisco’s unified communications platform and Microsoft Lync.

Whatever alternatives to Lync you ultimately decide to consider, ensure that you’ve done this due diligence before Lync arrives at your company’s doorstep. Make no mistake, Lync offers value, but it also further entrenches Microsoft into critical pieces of your IT and communications environment.

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

Microsoft’s CEO attended a joint press conference with New York City (NYC) mayor Michael Bloomberg to announce a new software deal for NYC. Details of the deal, including the related discount and Microsoft’s willingness to be flexible, suggests open source and cloud-based office productivity suites are becoming central to licensing discussions with Microsoft.

First of a kind deal or first of many?
According to New York Times reporter Ashlee Vance, Mayor Bloomberg began the press conference stating:

I am sorry if you are looking for a story of sex and pizzazz. That is not what this is about. This is about making the city government work better.

The deal, labeled as a “first of its kind” by Ballmer is valued at $20 million per year and will save the city $50 million over five years. To put these figures in perspective, NYC’s annual budget is about $63 billion.

NYC shifted from individual city agencies negotiating separate deals with Microsoft to a city-wide licensing deal for the city’s 100,000 employees. Additionally, Microsoft is allowing NYC to pay license fees based on the actual applications that city workers use. Vance reported that “New York will put workers into three categories based on how many applications they use.”

It could be argued that few enterprises are large enough and have not yet consolidated corporate-wide licensing to follow in NYC path. In fact, Ballmer is quoted: “corporations often negotiate more nuanced licensing deals than government bodies”. However, categorizing employees based on the applications they use, and paying for a few applications together versus selecting between an individual product license and a significantly larger product suite license could become more common in the enterprise.

Did Microsoft accept a 33 percent revenue reduction?
While “sex and pizzazz” may have been absent in the announcement, the deal, and the negotiation, could hardly be considered just another sale.

For one thing, it’s not everyday that Ballmer attends a press conference to announce a deal. Especially when the deal will, at least potentially, see Microsoft make $50 million less from the NYC over five years.

The quick math suggests NYC was able to negotiate significant concessions from Microsoft.

The deal is valued at approximately $20 million per year, suggesting approximately $100 million in revenue to Microsoft over 5 years. Next, the deal is expected to save NYC $50 million over that same period.

Using these two pieces of data, one could assume that Microsoft was on track to make $150 million over the five year period, had it been able to negotiate separate contracts with NYC agencies. Instead, Microsoft will settle for $100 million, or 33 percent less, over the five year period.  Additionally, this is a 33 percent reduction against the discounted rates that each NYC agency had already negotiated themselves as part of the potential original $150 million over five years.

It could be argued that the $50 million in savings are not entirely due to a reduction in license fees paid to Microsoft. Maybe some city agencies were using alternatives to Microsoft technology, and will now use Microsoft products and thereby save the city money. This would represent net new revenue for Microsoft while also reducing NYC’s costs.

However, to even consider a 33 percent discount on already discounted city prices, if Microsoft were displacing a competitor in any part of the NYC, Microsoft would have negotiated to make this fact public.

There was no mention of Microsoft displacing a competitor in the announcement.

In fact, quite the contrary, NYC Deputy Mayor, Stephen Goldsmith, credited competition for helping NYC negotiate the significant discount. Goldsmith is quoted: “we took advantage of the competitive moment.”

Playing the Google & open source card
IT decision makers are increasingly using Google Apps and open source office productivity suites as negotiation tactics. Vance quotes Mary-Jo Foley, a well known Microsoft reporter, stating:

So many of the customers I am talking to play the Google card even if they have no intention of going to Google. Microsoft knows people are doing it, but what can they do?

It’s logical to assume that Microsoft will be pushed to a point at which they will aggressively attempt to call a customer’s bluff. As much as companies would like to threaten “we’re going to drop Microsoft Office”, the realities of doing so are far from clear cut – at least today.

IT decision makers are encouraged to help a subset of users to build skills with alternatives to Microsoft Office today. Users that require infrequent access to office productivity tools, or that need to access files and collaborate across computing devices could be good candidates.

At the very least, this will help companies appear more credible during future negotiations with Microsoft.

It’s interesting to note that as part of the NYC deal, Microsoft was able to convince NYC to license Microsoft products for a, as NYC deputy mayor Goldsmith claimed, “a large number of individuals that don’t even have e-mail access”.

While NYC has certainly negotiated an aggressive deal with Microsoft today, one can’t help but wonder if they’ve lost future negotiation power. Not only is NYC remaining fully committed to Microsoft client technologies, they are also increasing the number of city employees skilled with Microsoft products. These two points will make it even harder for NYC to adopt a competitive solution in 5 years.

Negotiate hard, like NYC did. But don’t forget to take steps to ensure future negotiating power.

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.

This Silicon Alley Insider chart of the day, via Tim O’Reilly, caught my attention.  While Microsoft reports operating profit by division in their quarterly SEC filings, the chart does a much better job of telling Microsoft’s business story over the past 3 years.

Source: Silicon Alley Insider Chart of The Day

When the chart was first posted, the date range spanned September 2006 to September 2009.  Silicon Alley Insider added the December 2009 data after a comment on the blog post.  As a result, you’ll notice that the y-axis doesn’t actually span the size of Microsoft’s roughly $10 billion operating profit in the December 2009 quarter.

It’s no surprise that Office and Windows make up the overwhelming majority of Microsoft’s profits.  The Entertainment and Devices division (E&D) seems to be oscillating between profitability and loss, with profits being highest ahead of and during the holiday season.  However, as a commenter, Se7en, writes on the post:

“Wow. E&D still isn’t even making a dent. All the great press, accolades, bragging about the Xbox360 and how it won the console wars, took the war to the living room, and rejuvenated the company, and that’s what we get? A little blue smudge on the bottom of the graph?”

To which, ex-Wall Street analyst Henry Blodget writes:

“@Se7en: Yes. At least it’s not subtracting $2 billion a year, though. (See: Online)”

Entertainment & Devices and Online Services are two important investment areas for the company, made possible by Microsoft’s impressive profits in the Office and Windows divisions.  Whilst Microsoft has had some success attracting the hearts of users in these market areas, there’s a long road ahead before claiming success versus Apple and Google respectively.  Frankly, one has to seriously ask if these investments will ever amount to being the profit engine(s) for the company.  Note, I’m not suggesting that Microsoft abandon or minimize these investment areas.  Rather, I’m asking whether these divisions stand poised to replace the profits from Office & Windows in the face of open source and cloud-based competitors.

This brings us to the Server and Tools business.  With a healthy $1.5 billion in quarterly operating profit and growth over the 3 year analysis window, this division that could potentially offset erosion to the Office and Windows cash cows.  Keep in mind that Microsoft’s cloud, Windows Azure, recently moved into the Server and Tools division.  With the industry emphasis around cloud computing, and Microsoft’s success with .NET middleware, Microsoft likely its future linked heavily to the growth and profitability of the Server and Tools division.

Time will tell.

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%

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