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IBM and Red Hat Sign Major Support Agreement

Posted by chrisd on from the red-fedora-on-a-blue-suit dept.

gnudot writes: "Red Hat announced this morning that they have entered into an agreement with IBM to provide support services for the entire eServer product line. This includes zSeries, iSeries pSeries in addition to the xSeries (What no qSeries? or 7Series?) which is already supported. Here is the story on Yahoo."

21 of 188 comments (clear)

  1. sidenote... by Misha · · Score: 5, Interesting

    this sent RedHat shares flying, as well as some other Linux stocks, such as Caldera and VA Systems.

    --



    I was thinking of how to intentionally fail my drug test... It would make a good memoir story someday.
    1. Re:sidenote... by selectspec · · Score: 5, Interesting

      I think this pretty much seals the deal with RedHat as the defacto Linux distro for the commerical OEMs. What do people think?

      --

      Someone you trust is one of us.

    2. Re:sidenote... by Misha · · Score: 4, Insightful

      that's because the deal is a big deal for RHAT but a far lesser deal for IBM.

      If you think about it, IBM could probably do better with AIX. The price drop simply reflects that in the short term there will be AIX to Linux migration issues which may cause IBM extra money spent. But in the long run, it is a better deal.

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      I was thinking of how to intentionally fail my drug test... It would make a good memoir story someday.
    3. Re:sidenote... by Anonymous+DWord · · Score: 3, Funny

      Well then you should be happy MSFT went down. That's like *making* money!

      --
      "If he thinks he can hide and run from the United States and our allies, he's sorely mistaken." Bush on bin Laden
    4. Re:sidenote... by nazgul · · Score: 3, Informative

      Red Hat's CFO was on CNBC this afternoon discussing the deal. He advised that the company is expecting strong growth for this quarter and re-iterated Red Hat's offer of providing software for every school in America if Microsoft would change it's settlement and provide all the hardware. Red Hat would also provide support and upgrades forever.

    5. Re:sidenote... by istartedi · · Score: 4, Funny

      You don't understand VA's business strategy:

      1. invest in idea.

      2. continue to invest in idea even though you are losing money.

      3. realize that idea loses money, stop investing in idea.

      4. stare dumb-struck when some other company that stuck through just a little bit longer actually starts making money.

      This is known in MBA school as the "totally out of whack inverse biorythm business strategy" or "the 180 degrees out of phase business strategy". Most MBAs are supposed to learn how to avoid it in the first few weeks.

      Amazingly, they are actually still in business with this strategy.

      --
      For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
  2. not just support and services by tim_maroney · · Score: 3, Interesting

    The press release at Red Hat also mentions software solutions.

    I'm not sure what to make of this exactly. How many of these servers does IBM sell? If the services market here is lucrative, then why doesn't IBM keep it for itself? Still, it seems like it might be a nice little revenue stream for Red Hat.

    Tim

    1. Re:not just support and services by frank_adrian314159 · · Score: 5, Insightful
      How many of these servers does IBM sell?

      Tens of thousands per year. More important still is the installed base of these machines, which run into the hundreds of thousands. To be honest, most of the installed base of these machines don't currently run Linux, being split among OS/390, OS/400, AIX, and (of course) Windows. But many of them might be willing to switch. Even more, if Red Hat does a good job

      As to why IBM would spin off Linux support, it's probably a good deal for them. Good S/390 and AS/400 people don't come cheaply in the best of times and many may not be well disposed towards learning Linux (which they rightly perceive as a less reliable and stable OS than the native alternatives). The Intel box guys have a hard enough time dealing with Windows. The training costs assciated with this venture would be hideous.

      Now, if you sell the software support business to Red Hat, you can still sell hardware support, still write software for the platforms, and still sell the iron. Plus, you've laid off the risk of Linux failing and the cost of hiring new people to an independent entity. Looks like a good deal to me, if I'm IBM. Looks like a good deal all around...

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      That is all.
    2. Re:not just support and services by MythosTraecer · · Score: 3, Informative

      A couple of years ago, there were 250,000 AS/400s in service. That market isn't growing, but it's probably not contracting, since those customers are a hidebound bunch. I seem to remember that average AS/400/iSeries customers spend $100,000 or more on their machines.

      I have no actual sales numbers on System 390/zSeries servers, but I seem to remember most customers spending at least $1 million for each of those.

      Between the iSeries and zSeries customers, we're talking about customers who have enough cash to pay extra for support and services. And I know these customers most often pony up extra for IBM support services anyway, so it probably won't be such a big deal for RedHat to get a nice piece of that pie.

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      --Mythos
    3. Re:not just support and services by tim_maroney · · Score: 5, Interesting

      Tens of thousands per year. More important still is the installed base of these machines, which run into the hundreds of thousands. To be honest, most of the installed base of these machines don't currently run Linux, being split among OS/390, OS/400, AIX, and (of course)

      I'm not sure of the source of your numbers, but let's take them as golden, and say 50,000. Now, I wonder how many of those new systems run Linux, and how many run IBM's OS. Would half be a nice optimistic guesstimate? As for conversion of machines already in the field, I'd have to say I'd be surprised if it were as much as five percent overall, and much less than that per year. For now let's ignore it. So that's maybe 25,000 each year.

      Now, how much are the support contracts? The Red Hat site doesn't really give numbers for all its options, but the Enterprise Edition comes with a pretty sweet support contract, and it's $2,500. A later message in the thread says IBM support can be about $10,000 per annum, so let's split the difference and say $6,250 per box. Let's further be optimistic and say that anyone who can afford one of these servers will get a support contract -- even though people running Linux may be inherently cost-averse.

      Yeah, I know this is really fuzzy. I'm just trying to get somewhere close to an order of magnitude here.

      So that would be something close to 25,000 * $6,250 = $156 million per year, increasing by that amount per year, and more than doubling Red Hat's current revenue in the first year. Not too shabby! But I'm not sure how real those numbers are, or what the cost of generating the revenue would be -- services businesses traditionally have pretty slim margins, and it looks like there's some R&D to be done before this even starts. Still, if this is even in the ballpark it could be pretty sweet.

      Plus, [IBM has] laid off the risk of Linux failing and the cost of hiring new people to an independent entity.

      That's the thing that concerns me. There's something about this that smells more like passing the buck than sharing the wealth. If the adoption percentages are significantly lower than my guesstimates -- like 25% of new systems instead of 50%, or a 50% purchase of support contracts instead of 100%, much less both -- it's not going to do that much for Red Hat. I guess time will tell. For now I'm happy to be confused on a higher plane.

      Tim

  3. Now *this* is the way Open Source should work... by Bonker · · Score: 5, Insightful

    IBM is doing what they do best... making damn good hardware.

    Redhat is doing what they do best... making a damn good server OS. Apparently, it's better than AIX. At least it's costing IBM less, which is a good goal as well. IBM gets Free software to run on its high price enterprise-class servers. Redhat gets paid a lot by a huge company for support, and incidentally for further development. They also get a lot of prestige... and more penguins spraypainted on sidewalks, I'd imagine.

    Everyone else gets the fruits of IBM's and Redhat's labors in the form of GPL and other open-license software. Win-Win-Win

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  4. But did you read the fine print? by The+Slashdolt · · Score: 5, Funny

    Redhat will also be responsible for cleaning up the linux graffiti ads that IBM did in SF. That's not my definition of "linux support"

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    mp3's are only for those with bad memories
  5. IBM Marketspeak conversion by MythosTraecer · · Score: 5, Informative

    For those of us still not comfortable with IBM's new eServer marketspeak, here's a simple conversion chart:

    eServer Name == Real Name
    iSeries == AS/400
    pSeries == RS/6000
    xSeries == Netfinity/PC server
    zSeries == System/390 mainframe

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    --Mythos
  6. Re:Now *this* is the way Open Source should work.. by RobL3 · · Score: 5, Interesting

    "Apparently, it's better than AIX"
    No.

    AIX will still run on clients high-end mission critical servers. Linux will run on small to midrange servers.

    If you think that a Fortune 100 company like the one I work for is going to switch >1000 AIX servers to Linux, You Are Nuts. We want IBM reliability, IBM support, and IBM accountability.

  7. Rock on! by uslinux.net · · Score: 5, Insightful

    This is precisely the sort of thing that will help ALL Linux-related companies. IBM wants to dethrone Microsoft. IBM still supports NT/2k/whatever for their customer base, but they increasingly recognize they can't win at this alone. RedHat wants to sell software - not just RedHat Linux, but things like Interchange and Stronghold. Being able to sell hardware with packages like Stronghold ready to roll right out of the box is a major boon for IBM and RedHat. It also helps IBM because they don't have to roll their own Linux distribution to sell their hardware. Big Blue has finally seen the light.

  8. Re: not pissing off by mughi · · Score: 3, Interesting
    Why piss off Redmond when they don't need to?

    One might be able to argue that IBM has been doing things just to piss-off and beat Microsoft. Open-source labs, linux for iPaq, and their whole jump behind Java...

    IBM seems to have gotten into a situation where they can benefit the public while at the same time take a swipe at a long-time 'enemy' (remember IBM getting the short in with DOS, OS/2, etc.). Seems like a win for consumers, and an example of open-source and the free market together benefiting consumers.

  9. Re:And I STILL say IBM should do a Linux distro! by 3am · · Score: 3, Insightful

    IBM's already had their anti-trust difficulties, and entering the desktop/workstation/lower-end server OS arena probably wouldn't look good from that perspective (different (imho) from creating their own proprietary OS, but....)

    anyway, i understand you point. personally, i'm torn between 1.) having IBM create/buy their own distro and create a huge chunk of legitimacy for Linux with huge/rich customers of IBM (and in turn attract more developers) and 2.) that an IBM distro could be disastrous for Debian, SuSe, et al. - most businesses that have a choice between IBM products and non-IBM products would choose IBM if they had the $.

    (i totally agree with you about management fascination with all things IBM - have you ever seen one looking at a decked-out ThinkPad? although, honestly, i get a little misty eyed myself :) )

    --

    A: None. The Universe spins the bulb, and the Zen master merely stays out of the way.
  10. Speaking of the 390 (a very obscure pun) by fm6 · · Score: 4, Interesting
    It's the current sequel to the IBM System 360, the first computer with a byte-oriented architecture. Previous systems used word-level addressing. This meant that different kinds of users couldn't share computers, because the same word size (and thus data precision) doesn't make sense for all applications. The various 360 models had different word sizes, but all used byte-level addressing. So word size became a matter of efficiency, not compatibility.

    Thus IBM marketed the 360 series as the "all-around" computer. Which is why its logo was a compass rose. And, of course, the punny name...

  11. Ironic situation. The enemy of my enemy is my... by vbprgrmr · · Score: 5, Interesting

    It's an ironic situation that the people (myself included) who are cheering any success Linux has with IBM, also cheered the past day the micro-computer came home to hopefully free us from the tyranny and centralized power of the main-frames from IBM, and the blue suits, the corporate mentality, and the whole IBM philosophy.

    It's incredible that Microsoft has fowled up things so badly that it causes us to cheer the success of our former adversary.

    Long live IBM and Linux!!
    Damn. This old hippie can't believe he just said that.

  12. Re:And I STILL say IBM should do a Linux distro! by finkployd · · Score: 4, Interesting

    IBM has possibly the most impressive history on Earth of "Bad Marketing for Good Operating Systems". I mean, think about it, AIX rocks (although I see Linux passing it in x years), OS/2 ruled, and OS/390 defines stability in a way that no other OS will even approach in decades. Yet they cannot market them at all.

    Now hardware, IBM knows hardware. They can make it, they can market it, and they can make money off it. Let them stick with what they do best and leave the rest to others. If they happen to be able to sell more hardware by helping someone else develop software for it, then it's better for everyone.

    Finkployd

  13. Does this mean... by sporty · · Score: 3, Funny

    Does this mean they'll have red ibm logos or blue redhat logos' on them?

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    ping -f 255.255.255.255 # if only