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Red Hat Advanced Server Looks Attractive to Financial Services Companies' IT Departments

Earlier this week, we reported on the Forbes article that said Merrill Lynch and CSFB are replacing UNIX with Linux. We are beginning to believe that the spin on this article and our interpretation was not quite right. We did not sufficiently factor in enterprise IT's interest in Red Hat Linux Advanced Server and how it differs from Red Hat Linux 7.2 Professional.

This became more obvious with the publication of Red Hat Advanced Server: The real enterprise deal? by Steven J. Vaughn on NewsForge. Apparently, it was easy to miss the differences between Advanced Server and Red Hat 7.2 Professional because the announcement of Advanced Server featured representatives from large enterprise IT, stating their interest and commitment to the platform.

Read on for more about the article and our interpretation of it....

According to the article:

It's not just the Red Hat customers and their wallet size that was impressive, though; Red Hat people claim RHLAS is a different take on Linux. Mark de Visser, Red Hat's v.p. of marketing, says that before RHLAS, almost all major Linux distributions were general purpose and meant for everyone from "college students to the enterprise. But RHLAS is for the enterprise only."

Bill Claybrook, research director for Linux and Unix at the Aberdeen Group, sees RHLAS as Red Hat's way of "telling the computing business that they're serious about getting Red Hat into the enterprise. Prior to this, they've been all over the place."

One way de Visser says that Red Hat is stabilizing RHLAS is putting it on an 18-month life cycle. The RHLAS that will be out next month, with a year of support and a starting price of $800, will use the same code base until well into 2004.

In our experience, the key to the increased value of Advanced Server over other flavors of Red Hat is the 18-month life cycle. If Red Hat succeeds in executing on this promise, they will attract a lot of IT managers from Financial Services companies that use other versions of UNIX. An 18-month lifecycle for OS code bases seems to be a sweet spot for these people. It's long enough to be the basis for long-term IT planning.

A lot of people we know with software development experience are certain that IT costs can be reduced through migration from Solaris, AIX, and HP-UX to Windows or Linux. The differences between Windows and Linux that truly matter to IT people are:

  • application software porting costs
  • platform stability
  • availability of technical staff
  • vendor lock-in
  • license costs

Others may order the list differently than we have, but we are fairly confident that pros in the field would list license costs near the bottom.

With the change in philosophy that underlies Red Hat Linux Advanced Server comes a dramatic increase in perceived platform stability, which is likely to be realized if they execute on their business plan. If any Linux OS Distribution achieves both volume shipment and increased platform stability, it will be a serious alternative to the other UNIXes. It is much easier to port from an Enterprise UNIX to Linux than to Windows. This is why we now see the announcement of Red Hat Linux Advanced Server as a major development in the IT market, with particular impact on Financial Services businesses.

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