| Red Hat and JBoss: the good, the bad, the ugly |
Apr. 10, 2006
The news has hit the Linux world like a thunderbolt -- two of the biggest names in open source were coming together. Red Hat was acquiring JBoss. What does this deal really mean?
As Scott Donahue, a VP for technology analyst firm The 451 Group, said, "The acquisition comes as a bit of a surprise."
What was really surprising, though, was that Red Hat was the company doing the buying.
"Red Hat did not seem like a likely buyer on many fronts ranging from the relative small size of Red Hat, to their cash position, to cultural differences," said Donahue. Still, the deal will "significantly expand Red Hat's portfolio beyond its core Linux server market, create revenue and earnings upside, and help solidify the company as the primary commercial open source software."
According to Tim Yeaton, Red Hat's senior VP of Enterprise Solutions, the deal was something of a surprise to Red Hat as well.
The companies had only been "working together on the deal for several weeks," said Yeaton. Of course, "the companies have had a working relationship for years," he added.
It's also a deal that makes a great deal of sense to the analysts.
Michael Goulde, a senior application development analyst for Forrester Research, said, "This is a good move for Red Hat. IT customers want one-stop-shopping, especially in open-source. That's because support is a concern for open-source users and with this deal businesses can get all the support they need."
It also helps that the deal will "combine the two strongest open-source brands under one umbrella," added Goulde.
Gordon Haff, senior analyst for research house Illuminata Inc., takes it one step further. "Red Hat's becoming the open source Microsoft -- if you want a complete open source stack, they're the ones to go to."
That may be good news for Red Hat, but "This can't be good news for Novell; at one level they can play the 'freedom of choice' card, but this will ring a bit hollow given that their big play against Red Hat has been breadth of software assets," Haff added. "This acquisition doesn't invalidate that, but it does bolster Red Hat's capabilities."
Novell is making what they can of the situation.
Bruce Lowry, Novell's director of global public relations, said, "Novell is committed to delivering a full open standards-based infrastructure stack to our customers. Our model is to build, buy, and partner to deliver and support that stack and to continue to allow customers to choose the best mix of proprietary and open source technologies based on open standards."
"To date, we have partnered with and supported many proprietary and open source alternatives for application servers, including IBM WebSphere, BEA WebLogic, JBoss, Tomcat and Geronimo, to name a few. We have a contract in place with JBoss and we plan to continue to honor that contract," said Lowry.
It appears that JBoss will be standing by their end of the partnership. Sacha Levourey, JBoss's CTO, said that JBoss plans to stand by its existing partners.
Still, Goulde feels that working out Red Hat's and JBoss's partnerships will be a difficult challenge for the merged company. "Red Hat will need to make some tough decisions with partnerships. IBM and Oracle are now competitors, and JBoss has same issues with Novell."
Donahue thinks that some of this can be worked out by keeping JBoss as a stand-alone division of Red Hat. Donahue expects, "JBoss will continue to run fairly autonomously within Red Hat and will continue to work with Red Hat competitors such as Novell."
There may be something to that. Red Hat's Yeaton said that while Red Hat and JBoss "will work hand in glove, the Intent is to maintain the separate divisions." Indeed, JBoss may retain its name. "JBoss' name hasn't been decided yet, but its brand is very powerful and we want to leverage it," he said.
The real problem several analysts see is whether flamboyant JBoss CEO Marc Fleury can work reporting to Red Hat CEO Matt Szulik.
Goulde said, "We also see cultural clashes between JBoss and Red Hat, especially between Marc Fleury and Matt Szulik."
Donahue agreed, "There may be differences of opinion on where the company should go. I can see Fleury wanting to have a big say in Red Hat's direction."
In addition, the new company's software stack isn't finished yet. "There needs to be a Red Hat database," said Donahue. And, "Marc has some strong feelings on database that may not agree with Matt's."
Another difference is in how the companies work with open source. "Red Hat gives a lot to the broader open-source community, whereas JBoss tends to work more in-house and give little to the community. They'll need to work out, which approach the new company will take," said Donahue.
Cultural differences aside, employees of both companies will be glad to know that, unlike many mergers, Red Hat does not plan to lay off any employees. "Both companies are growing and we don't see any needs for layoffs," said Yeaton. Additionally, Red Hat plans to keep all of the two companies' existing offices open, so for staffers there will be little in the way of day-to-day changes after the merger is completed in May.
In any case, however, "It will be interesting to see how it plays out," Donahue concluded. No one can argue with that in what's the bigger open-source merger to date.
-- Steven J. Vaughan-Nichols
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