Golden's Rules: Red Hat/JBoss pairing bad news for BEA, Novell

Red Hat's acquisition of JBoss is bad news for proprietary middleware vendors, particularly BEA, and Red Hat's competitor, Novell, says columnist Bernard Golden.

Red Hat's $420 million acquisition of JBoss is a case of the other shoe dropping, but it dropped in an unexpected place. Everyone at the recent Open Source Business Conference thought that Oracle would buy JBoss for $400 million.

So, there's a different name on the marriage certificate. Is that good or bad news? It's both, and here's why.

Who's going to get hurt?

Red Hat's coup, and I do think it is a coup, will get the goat of some commercial, proprietary software companies.

Commercial middleware vendors can't make lemonade from this lemon. With a fully-certified, open source stack available for free, it will be much tougher to present a credible value proposition for proprietary software.

I predict a coming free-fall in middleware pricing. Suddenly, customers will consider a proprietary middleware stack a money pit, earning little, without a competitive advantage. Commodization means you get paid for the value you add to the commodity through service and support; however, the margins available on service and support are much lower than for software licenses, so proprietary vendors will see revenues plummet.

In particular, BEA, a leading middleware company, is vulnerable. Other large middleware vendors -- SAP, Oracle and IBM -- have other revenue streams to tap when they set the price of their middleware to meet the open source competition. I admire BEA for many things -- such as their commercialization of the Tuxedo product, which I used in the past and remember fondly -- but they are a one-trick pony.

BEA has recently put a lot of emphasis on their AquaLogic SOA product. The question is whether they can afford to continue building proprietary underpinnings beneath AquaLogic. I think they'd be better off with open source middleware under AquaLogic.

Who's in the catbird's seat?

The Red Hat/JBoss linkup is good news for these folks:

  • JBoss employees and investors: That's an easy one. Started by Marc Fleury in his in-laws' garage, JBoss will richly reward its employees and investors. I salute them. When JBoss got started, skepticism about the value of open source software and open source companies was rampant. This purchase will give JBoss supporters the chance to blow a raspberry and laugh all the way to the bank.

  • JBoss employees and investors, part two: Teamed with Red Hat, JBoss will gain more traction in the marketplace. The company's team members, who took a chance on this start-up, will see their passion and hopes doubly rewarded as a result of the Red Hat acquisition.

  • Red Hat: With JBoss inside, Red Hat will be able to deepen its software stack and increase its value proposition to its customers. This translates into additional dollars that can be harvested from its user base. (Remember, that was kicked around as the whole rationale advanced for the rumored Oracle acquisition of JBoss.)

    Red Hat is a much more logical purchaser than Oracle, which would have suffered from internal culture conflicts had it tried to integrate an open source product into their overall product line. After all, what self-respecting sales rep is going to push a low-priced open source product when he or she can sell a high-priced Oracle product and thereby make President's Club?

  • Current and potential JBoss users: While JBoss has done a great job of building and distributing its products, the backing of the much larger Red Hat will give users more confidence in the longevity of the product. Having Red Hat committed to the product reduces the risk of using it, and that is true whether the user obtains JBoss from Red Hat or just downloads it off the Internet.

  • All open source developers and users: While some may read the Red Hat acquisition as somehow creating a walled garden, I take a different view. Everyone benefits by investments in more robust open source software. This acquisition has the effect of making open source more credible, which will help all open source developers and users, even if they have nothing to do with Red Hat or JBoss.

Some good, some bad for Novell

Some people get good and bad things from an event. In this case, Novell is on that seesaw.

The Red Hat/JBoss team make a formidable competitor for Novell. Now, Novell -- which, up to now, hasn't wowed anyone with its strategic moves -- has to come up with a winning response strategy.

On the other hand, all major IT vendors and users have learned the danger of dependence upon a single provider, which can be summed up in one word: Microsoft. Just as the U.S. Government always wants a second supplier for any procurement category, the entire IT industry knows it needs a credible alternative to Red Hat for an open source software stack.

So, Red Hat's strength will win new friends for Novell, as other players seek to strengthen their positions as credible alternatives. I wouldn't be surprised to see equity investments into Novell, as those players want to help Novell build out its software stack.

There's another way Novell could benefit from IT players' desire for a Red Hat alternative. Many wise folks in the IT industry are saying that Novell may be acquired by a vendor, such as IBM or Oracle, that wanted to build its own Red Hat alternative. I'd rather not see that happen, because I believe IT customers are better served by vibrant, independent alternatives, not by a captive supplier imprisoned within a large IT player. I hope the major IT software players agree with me, and the customer wins.

Golden's Rule: Open source is playing a leading role

The Red Hat acquisition of JBoss will spur open source commitment and adoption, but it is by no means the last chapter. To quote Winston Churchill: "This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."

This is an early shot in the commodization war that is going to sweep through the proprietary software world. This won't be a bloodless revolution, and commodization will be tumultuous and painful. There will be many casualties, but the final outcome will be more expansive and productive use of more software by more organizations. It's a time to be nimble, not lumbering.


About the author: Bernard Golden is CEO of Navica Inc., a systems integrator based in San Carlos, Calif. He is the author of Succeeding with Open Source (Addison-Wesley) and the creator of the Open Source Maturity Model (OSMM), a formalized method of locating, assessing, and implementing open source software.

Dig deeper on Linux management and configuration

0 comments

Oldest 

Forgot Password?

No problem! Submit your e-mail address below. We'll send you an email containing your password.

Your password has been sent to:

-ADS BY GOOGLE

SearchDataCenter

SearchServerVirtualization

SearchCloudComputing

SearchEnterpriseDesktop

Close