Microsoft to buy Red Hat? Say it ain't so

Microsoft to buy Red Hat? Say it ain't so

Summary: From Red Hat's perspective this could be a marriage made in heaven -- offering both a defense againstthe two greatest strategic threats it faces and a graceful way for key players to foldtheir tents and steal away into the night.

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TOPICS: Open Source
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In Paris, Ontario, there's a large plaza sign advertising both The Paris Sleep Laboratory and the Canadian Post Office. The synergy there, of course, should be obvious --at least from the point of view of the humorist. Recent revivals of the idea that Microsoft might want to take over Red Hat have a similar quality to them.

As David Berlind recently pointed out in his piece Is Microsoft considering acquisition of Red Hat? Microsoft could see Red Hat's acquisition as a nice way to undermine IBM, but might not consider that a sufficient reason to do it.  That, of course, is Microsoft's perspective, but what about Red Hat's? This is a company, remember, that wants to be Microsoft and, like Microsoft, makes its living packaging and selling other people's ideas.

From Red Hat's perspective this could be a marriage made in heaven -- offering both a defense against the two greatest strategic threats it faces and a graceful way for key players to fold their tents and steal away into the night.

The biggest threat Red Hat faces right now is that IBM could settle with SCO and then release its own Linux along with workstations and servers based on the Cell processor. With SuSe essentially out of the picture, Linspire in a world by itself, and Debian not getting the press it deserves, such a move by IBM would leave Red Hat with nowhere to go except a suicidal head-to-head competition with Microsoft in the x86 marketplace. Given that Cell outperforms x86 by an order of magnitude and doesn't have the security weaknesses built into the x86, this would leave them fighting to hold an ever decreasing share of a shrinking market.

The second most important threat facing them is that an IBM Linux on Cell offering gives the Linux and general open source communities an opportunity to rebel against Red Hat's pretense of selling support with free licenses rather than licenses with free support. Since that's the fundamental underpinning for Red Hat's business model, taking it away would obliterate the company.

Getting acquired therefore makes sense as Red Hat's Plan B -but Microsoft's Plan B has traditionally been Plan A delayed a few years and I can see no reasonable business scenario under which the acquisition makes sense for them. What would make sense for Microsoft, in contrast, would be a technology sharing arrangement with Red Hat in those areas, like identity management, where doing so would assert Microsoft's freedom of action without actually contravening the letter of its settlement agreement with Sun. That would neatly leverage Red Hat's traditional anti-Sun stance as a balance against its own uncomfortable relationship with the people it fears most, at the cost of giving Red Hat some positive press and incurring the risk of being named in a few more GPL lawsuits - in other words, a deal with nothing but upside for Microsoft.

Topic: Open Source

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26 comments
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  • hey, it isn't 1st of April!

    What a piece of FUD :)
    Everyone knows (including the author) that RedHat would have no chance on the market if bought by M$ (either by simply killed by M$ or because of the bad name M$ has). This is the hidden fear this article plays on.
    But if it has no chance on the market, why would M$ buy it. Even if RedHat is guzzled, new distros would quickly assume the role. It is futile to resist Linux and quite costly to do it this way.
    MOG Fan
  • Stupid ZDnet servers

    I think you aren't understanding the IBM business model. They don't WANT to own and develop OSes! THAT was the ENTIRE reason behind their Linux push - let SOMEONE ELSE do the OS work, and they do the consulting. Even IF M$ buys DeadRat, IBM will strengthen their ties to NOVELL - and NOT make their own Linux!

    This is the same line of reasoning that Scott McNealy used regarding AMD. Sun could BUY AMD, but then you would see big vendors like IBM and HP dumping opteron - since their rival now owns it. It was in Sun's best interest to NOT buy AMD. Whenever you buy some core technology, your competitors will jump AWAY from that technology.

    IBM's Cell processor is nothing more than a multi-core PowerPC chip. The first adoptor will be Apple, and then Sony for the PS3. If you can run Apple OS on the Cell, why would people jump at Linux on the Cell? I think that people would buy Cell machines from IBM (with Linux perinstalled) and then try to get OS/X running on them (Cheap mac clones?). THAT would be the market!
    Roger Ramjet
    • A comment on Cell

      I'll try to clarify the new CPU relationships in tomorrow's blog entry. In brief, however, IBM's cell is really a GRID system reduced to a chip, not a multi-core machine like the Power5 or the new Xbox CPU.

      It's possible, of course, that Apple will choose to run on Cell, but I doubt it because the graphics model is simply too different. In fact, as I've said elsewhere, Apple would face less of a transition moving to SPARC.
      murph_z
    • Why would anyone want to run apple OS ?!

      Why would anyone want to run apple OS ?!
      by the way, the whole story is stupid ..
      mad-man
  • If MS did buy RedHat

    IMO, it would result in a massive increase in business for Novell/SuSE.

    And I suspect community developer support for RedHat would quickly disappear.
    alterego_z
    • Not to mention

      [quote]And I suspect community developer support for RedHat would quickly disappear.[/quote]

      Don't forget the employee developer support. None of them have to work for Red Hat when there are plenty of others who would hire them in a heartbeat.
      Yagotta B. Kidding
      • Oh no! That would mean....

        ...that there are only 499 distros, and companies and organizations making them!

        Ok, I'm exaggerating, but I don't see this as a big deal. Yes, Red Hat may be the most well-known, but there's little or nothing you can do with Red Hat's distros that you can't do one way or another with some other high-end distro.

        Plus, as others have said, Red Hat would lose many of its OSS development team who would likely leave the company out of spite (the ABM religion is very strict).
        doctormoriarty
    • Re: If MS did buy RedHat

      they would quickly reverse engineer it and adapt its secuity feature to Windows and IE, which would not be a bad thing.
      DragonBRockin
      • It would because any

        changes or code that mingles with the GPL'd code would have to be returned to the public domain... and you know the likelihood of that?
        Linux User 147560
      • What reverse engineering?

        There would be no need to reverse engineer anything. The code is public.

        But I agree. Dumping the Windows kernel and putting the Windows shell on top of a Linux/Unix kernel is probably the only hope MS has of ever having any kind of security in Windows.

        Why MS has failed to copy Apple's idea of building OS X on top of Unix is a mystery. They've copied every other idea Apple comes up with.
        alterego_z
  • *shrug*

    Doesn't this rumor get enough chat time on slashdot?

    Windows isn't top dog in interfaces but in alot of ways they do better than linux (from an end user and compatability perspective, not a administration perspective or technical perspective.) I'm all for them aquiring a linux company, be humorous to see what kinda changes they would release back to the community... although it is probally true what one of the other posters said -- they would lose almost any developer support that exists almost instantly.

    Again though, really... shrug. We've heard this rumor bantered around for years... what else is new?
    Shadus
  • where do I buy my Cell processor?

    I must have missed the latest benchmarks on that hot PC with the Cell processor. I guess I'll have to wait until the new Playstation comes out with all that fabulous baked in security that won't let me copy anything. Yeah, that's better that x86.
    thedesh
  • Why make an agreement?

    Buying RedHat makes no sense at all from Microsoft's perspective, of course.

    And even the partnership discussed here seems unnecessary:

    What would make sense for Microsoft, in contrast, would be a technology sharing arrangement with Red Hat in those areas, like identity management, where doing so would assert Microsoft?s freedom of action without actually contravening the letter of its settlement agreement with Sun.


    RedHat is not big enough to be a concern; if other players set a standard for "identity management", RedHat would have to follow. The story today on the Microsoft and Sun identity management effort mentions getting IBM and BEA to go along, but doesn't say anything about RedHat.

    So long as IBM controls Linux, RedHat is IBM's monkey.

    I'm not hostile to RedHat, which appears to be trying to be a real company making real profits and paying money to real people. Even Steve Ballmer recognized that RedHat wanted to be a player, and had lunch, probably to say, "Welcome to the club."

    Thuis is about business strategy, which tends to be harsh. And about IBM, which tends to be exploitive.
    Anton Philidor
    • Control

      [i]So long as IBM controls Linux, RedHat is IBM's monkey.[/i]

      Put the pipe down slowly, Anton.
      Yagotta B. Kidding
  • How much FUD can you fit.....

    into 600 words???? This is the biggest pile of zd-poopoo I have seen in a couple of years....??!!!
    rock06r
  • Omg this has got to be the biggest pile of...

    ... horsecrap ever published.
    Can you believe it, I actually signed up to zdnet just to comment on this abysmal piece of writing.

    IBM selling other people's stuff? Opensource writers are *giving away* their own stuff! The difference is akin to pipes and joints costing pennies a piece, but people still want plumbers to fix their broken pipes at 50 bucks an hour.

    IBM settling with SCO? Is that why IBM spent millions of dollars so far defending themselves in court? Is that why IBM went to the trouble of getting hundreds of workers to scan tens of thousands of documents to prove to a judge that SCO's lawsuit is pointless? With the money IBM spent defending their case, they could have already taken the easy route and bought 51% controlling interest of SCO, but they didn't. And they never will.

    Suse out of what picture?? They're absolutely HUGE in europe. Their brand of os has been certified with the likes of Oracle and IBM, they're not going away *anytime* soon... and IBM will make very sure of that.

    Cell processor?? What the heck is this guy thinking? You think Intel/Nvidia/VIA are all suddenly going to mass-produce motherboards and chipsets? What the heck is Joe-schmoe office-email-checker going to do with EIGHT cores!? Linspire's a joke, and Debian has been picked up and been breathed new life from Ubuntu... which has the backing of billionaire-African-space-tourist funding.

    To summarize, the writers obviously have no clue as to how the tech world currently operates from a business perspective. Evidence of this is found in their utter cluelessness of each company's business models and exactly where their money comes from.

    These guys may have written a smart article once or twice before, but FUD like this just reaffirms the rumors I've heard that ZDNet is nothing more than a bunch of people throwing crap on a wall and seeing what sticks.

    Get a clue for goodness sake.
    icejai
    • He has no clue what he is really talking about.

      Issues:
      1) Red Hat is an open-source software integrator. It uses open-source software to create RHEL.
      2) Red Hat is an open-source contributor. Huge open-source contributor.
      3) Red Hat is selling me something that I need. The assurance that my RHEL AS servers will work. STOP. That's it. I'm just paying for the assurance of a working server infrastructure at my company. It's their responsability. They are not proprietary in any way. I have access to the sources. I can recompile anything, including the whole thing (CentOS ring any bells?!?).
      4) Red Hat runs on POWER. If there will be ANY comercial implementation of the cell processor for servers or workstations, Red Hat will run on that.
      5) You cannot sell licences of open-source software. If it's GPL, I can give that to anyone I very damn well please. RHEL can be redistributed if you remove the redhat logos from it. That's why the cannot sell licences and provide free-support.
      6) Keep SCO and IBM out of this. IBM has nothing against Red Hat because, on the commercially supported Linux side, Red Hat has been their biggest supporter for POWER architecture. SCO doesn't matter any more.
      7) BTW, didn't Microsoft have to allow the implementation of programs which inter-operate with their products? That means the opening of their protocols. Could this meeting be about that?
      8) Why would Red Hat want to be acquired by Microsoft? Would that pass the anti-monopoly department (or what's its name) of the US? If Red Hat would be acquired by Microsoft, then it would cease to exist. They don't want that (I think/hope).
      9) The Cell Processor does not exist yet. Not commercially, I mean. You shouldn't try to guess it's future. For a new and revolutionary processor you need a little more than performance. Think about POWER, Itanium, UltraSPARC, PA-RISC, Alpha, MIPS, etc. You need compatibility with what we have already (x86 CPU emulation), we need Windows running on that, we need a lot of things. We need chipsets, we need sound-cards, we need high performance NIC's and we need mature kernels. Although there are many mature kernels (Linux, *BSD, Windows NT/2k/XP/2k+3/etc.), the ports to this architecture don't have to be that stable.
      I want stability not raw power. If I need more power I just go and buy myself some new CPU's and/or servers. A new CPU, or server, for that matter is not that expensive, if I don't waste the computing power.

      P.S.: Please try not to follow the rest of the US mass-media. You really love hot stories, even if they are not founded. It was only a few days ago that Newsweek, screwed up with that crappy, tabloid-style story, and made a complete mess in Afganistan.
      P.P.S.: Want more? Mail me!
      d3vi1
  • Pay Attention...

    If RedHat produced a proprietary OS, it's purchase by anyone else probably would weaken IBM. It's probably not the OS itself that IBM cares about, but rather the support that RedHat supplies. Otherwise, IBM would be packaging Debian, Centos, White Box, or some other free distro. IBM doesn't really want to have an OS, they want to sell hardware and services, and that strategy is paying off. They partner with distros that have commercial support options so they don't have to deal with it themselves. And so people are not buying an "IBM Linux". They reap the benefits of being OS agnostic, they can sell any OS on their hardware, and customers don't feel they are locked into a lifelong commitment. If RedHat went away, what would keep IBM from spending a couple hundred million to invest in a new service company? Perhaps hiring all of RedHat's employees? If all RedHat is to IBM is service, there are a lot of other companies to turn to. Linux can't be taken away from anyone, that is the beauty of IBM's current strategy. IMHO
    dingletec_z
  • They can afford it and

    if they think this fits their plans and designs they will do it. They can always start a new business line when their loooooonghorns go down.

    After the fall of the communism, nothing suprises me any more. Actually if somehow start to be opening to the idea of OSS they will appeal much less as the evil people who stiffle whatever they cannot purchase.

    -
    michael-t
  • Too much complication....

    Microsoft is still under antitrust scrutiny both from Europe and a review later this year from the US. They're actions will be directed toward freeing themselves from that burden. Purchasing their nearest Linux distributing competitor would not fulfill that aim.

    Moreover, the tech community of early adopters, not to mention Redhat's internal developers would most likely flee in protest. Redhat's only asset is their brand and reputation. Selling the reputation to a geek-disreputable company would do serious damage to the respect Redhat has thus far engendered. The exodus would be if not immediate, then pronounced. Redhat would lose in the community by being acquired.

    So, let's strike down the possibility of a Microsoft buy: Microsoft gains nothing, Redhat loses everything in a slow bleed: what's left? What strategy is likely?

    Microsoft has no doubt been observing Novell's move to incorporate management of Linux servers into their Zenworks product. Since Linux represents 20-30% of server installed base and a rising percentage of sales, more Linux servers may very well translate into more Zenworks sales. Surely this is something Microsoft wouldn't like?

    On the flipside, Redhat also has a problem. Zenworks may well be optimized to work with Suse (Novell's GNU/Linux distribution). More Suse sales would naturally translate into less Redhat sales. If Novell won't play nice with Redhat (and why would they); Redhat needs another partner for server control. The natural choice would be Microsoft for Microsoft has the other solution in the marketplace. Natural fit?

    Now, that said, do I believe that the deal would make long-term sense for Redhat? In the short-term Redhat would benefit from holding Suse at bay, but in the long-term they may suffer from the Apple syndrome. Everytime the contract for the production of MS-Office or IE came up for renewal; Microsoft faced down Apple witha threat, "Do what we tell you (drop a lawsuit, don't produce product Y, don't enter market Z) OR we'll stop producing Office or IE or both." Everytime Apple vascillated on their decision, Apple's stock fell. Apple would give in, remain hobbled, and Microsoft would gobble the market they'd lifted from Apple. Redhat would be best to learn this lesson: "never base your expected future earnings on a product you don't own. Develop your own, PERIOD."

    Apple learned that lesson: they now produce their own browser and office suite. If I'm correct in my prediction for these high-level Microsoft-Redhat talks, then Redhat would be best to learn the lesson before they find themselves hobbled. Mind, I've about as much chance of being correct as I have of growing wings and flying to Moscow in the morning to dine with Putin, so take my opinion with a very large grain of salt. I've no inside information and am most likely completely incorrect.

    I'm guessing, but no moreso than ZD-Net.
    John Le'Brecage