Red Hat hopes to solidify lead with new Linux

Red Hat hopes its latest release will lock in its position as the Linux leader as more companies vie for a piece of the competitive market.

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Red Hat faces a lengthening list of rivals, but the company hopes to cement its lead in the Linux market Wednesday with its latest version of the open-source operating system.

The Raleigh, N.C.-based company plans to launch Red Hat Enterprise Linux 5 at a San Francisco event Wednesday. It's the first major update to the company's flagship Linux product in more than two years.

Though Red Hat still dominates Linux, a lot has changed in that time. Novell's Suse Linux Enterprise Server beat Red Hat to the punch with a major new feature, the Xen virtualization software.

Oracle has entered the market with a clone of Red Hat's operating system. Ubuntu is making inroads with strong ties to open-source community volunteers. And Sun Microsystems--for years Red Hat's prime target--is fighting back by bringing its Solaris operating system to widely used x86 servers and making it open-source software as well.

"Red Hat continues to be the vendor capturing the lion's share of revenue and unit shipments for worldwide Linux operating system shipments."
--Al Gillen,
analyst, IDC

"There is disruption from below from the community (Linux versions) and much stronger competition from its peer group," said 451 Group analyst Raven Zachary. "This will take years to play out, but I see Red Hat having less differentiation from other offerings over time."

Red Hat is still on the offensive, though. In its most recent publicly reported quarter, its revenue increased 45 percent to $105 million, 84 percent of that coming through recurring support subscription contracts. Though profit dropped 37 percent to $15.5 million, much of that was from higher expenses stemming from the acquisition of JBoss, a supplier of open-source Java server software that has provided Red Hat with its biggest opportunity for market expansion.

"Red Hat continues to be the vendor capturing the lion's share of revenue and unit shipments for worldwide Linux operating system shipments," said IDC analyst Al Gillen. Though Novell has remained relevant, the overall balance between the two Linux powers "hasn't shifted dramatically," he said.

RHEL 5's biggest new feature, hands down, is Xen virtualization. The promise of virtualization software, which lets a single machine run multiple operating systems in separate partitions called virtual machines, is that a single computer can replace several inefficiently used ones. In the longer term, virtualization also permits software to be moved--sometimes while running--from one computer to another, which opens the door for higher reliability and a fluidly responding computer room.

Red Hat aims to strengthen leadership role with new Linux release.

Accompanying the virtualization promise, though, are difficulties. Administrators need new management tools, software licensing becomes more complicated, and the underlying technology must be certified to work with a multitude of software and hardware options.

Red Hat will permit up to four virtual machines to run atop RHEL 5 Server, but it's adding a new product called RHEL Advanced Platform that supports unlimited virtual machines and includes the company's Global File System software.

Virtualization is moving to mainstream servers using x86 processors such as Intel's Xeon and Advanced Micro Devices' Opteron, but Red Hat isn't the only one making the push. It's not even the only one pushing Xen, which also is commercialized by XenSource and included in Novell's rival product.

"This is the beginning of (Red Hat's) serious endeavor. There's a lot at stake," Gartner analyst George Weiss said. "There's Novell and Virtual iron, Microsoft is coming along, then there's VMware," which already dominates the x86 server virtualization market.

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