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Mark Shuttleworth casts doubt on Red Hat's long term relevance

Pricing is the key
Wed Apr 18 2012, 11:19

THE FOUNDER of Linux vendor Canonical, Mark Shuttleworth has questioned whether Red Hat's pricing structure is viable for enterprise cloud deployments.

Canonical's Ubuntu Linux distribution is making a big push into the enterprise and cloud, where it will go head to head with long-time enterprise Linux incumbent Red Hat and its Enterprise Linux (RHEL) distribution. However Shuttleworth is not sure that Red Hat's pricing structure will make the firm competitive.

Initially Shuttleworth seemed to position Ubuntu as a cheaper alternative to Red Hat, saying, "What we set out to do with Ubuntu was essentially change the economics of software and shift them entirely away from the licensing such as Red Hat does. We started doing that in 2004, at the time people said it was crazy, but today people look at Android and it is entirely subsidised by Google and has a business model associated with services not licensing the platform. I look at our level of adoption and the level of commercial adoption of Ubuntu and it gives me plenty of reasons to stay focused, because I see enterprises coming round to the idea that a platform they can deploy anywhere they like, anytime they want and optionally tap into services they need is in fact the full expression enterprises want from free software."

Then Shuttleworth cast some doubt on Red Hat's long term viability, which ironically was a question Red Hat put to Canonical in an interview. Shuttleworth said, "So the question I would like to ask Red Hat is, how do they plan to stay relevent in a world where increasingly it is possible to be sustainable without licensing software in the way Red Hat does?"

Red Hat's Scott Crenshaw answered Shuttleworth's question by claiming that Red Hat doesn't have a licensing model. Crenshaw said, "I think Mark might be thinking of other companies in the industry instead of Red Hat when he says we have a licensing model. We have very substantial usage of Red Hat in enterprise and governments specifically because we have the right subscription rather than licensing structure for [the] cloud."

Crenshaw claimed Red Hat was one of the first to break away from licensing, saying, "Red Hat has been among the early innovators in licensing. We don't provide our software in a licensing model we provide it in a subscription model. What that means is that you pay based on some type of usage - in the past it has been annual but we were actually among the first companies to offer pay as you go pricing on clouds like [Amazon EC2]."

Crenshaw had previously told The INQUIRER that Canonical was subsidised by Shuttleworth and that the firm "hasn't yet figured out how to keep itself operating for the long term". Shuttleworth admitted that he was pivotal to Ubuntu's early growth and that the project did need someone like him to get off the ground.

Shuttleworth said, "I'm delighted that Red Hat recognises the importance of having a strong directive leader who cares about the project. Something like Ubuntu would have never got off the ground without an investor who cared both about the technology and the experience and had the means to drive it. There is certainly fire to that smoke, it is true I lead Canonical, I invest in Canonical and I believe that is the most efficient business model of software generally, and it will take time to demonstrate sustainability with that business model."

Both Red Hat and Canonical have scored significant success in the cloud, with firms such as HP opting for Ubuntu while Red Hat has Rackspace. However the two firms have different pricing models, and while Shuttleworth might cast doubt on Red Hat's long term relevance, Red Hat has money in the bank to promote an image of stability, something that even Shuttleworth admitted could take Canonical some time.

It seems clear that both Red Hat and Canonical view the cloud as a major opportunity, which explains why the two Linux based companies are competing hammer and tongs to attract business. µ


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