--- title: "Some thoughts on Red Hat's JBoss acquisition" date: 2006-04-11T00:35:31Z modified: 2006-04-11T00:35:31Z permalink: "https://redmonk.com/jgovernor/some-thoughts-on-red-hats-jboss-acquisition/" type: post status: publish excerpt: "" wpid: 577 categories: - Uncategorized timestamp: 2006-04-11T00:35:31Z tags: - Uncategorized --- I got a call from a reporter today asking about the [Red Hat JBoss](http://www.redhat.com/about/news/prarchive/2006/jboss.html) deal. RedMonk hasn’t had a chance to tease out all the implications but here are some of my immediate thoughts: The acquisition makes sense-bringing together as it does the leading OSS Linux platform and the leading OSS JEE platforms. JBoss and Red Hat have similar business models “ essentially commercial open source – which are far more similar than other rumoured acquisitions- such as [JBoss Oracle](http://www.redmonk.com/sogrady/archives/001296.html). So the fit is fairly clear. This is a depth and breadth play, rather than an attempt to find a new business model. The deal will tend to make Red Hat more JEE-focused, which may not be such a good thing, given JEE is currently at somewhat of [an inflexion point](http://www.redmonk.com/sogrady/archives/001261.html). JEE is undoubtedly still an extremely valuable play, but the market is certainly considering alternatives. RedHat just took aim and shot its partner IBM in the foot. Or maybe IBM shot itself in the foot. While the deal makes little difference to IBM Systems and Technology group (hardware, servers and storage), for Software Group the deal serves to increase pressure on IBM margins. JBoss is already being used as a negotiating lever by BEA and IBM customers to lower their WebSphere and WebLogic license fees. The RedHat deal will dramatically increase the trend, and puts RedHat in a very interesting position with respect to IBM customer relations. It now 0wns a surprisingly high proportion of corporate software expenditures at some joint customers. IBM’s decision to work with third parties that negotiate their own software licensing terms with IT shops could prove costly. From a grassroots developer perspective JBoss just gained another potential advantage over IBM WebSphere Community Edition. Its [all about the packag](http://www.redmonk.com/sogrady/archives/000432.html)e, rather than the download. I suspect in the long run that Oracle could still end up as JBoss steward, by acquiring Red Hat. Charles Phillips has plenty more deals in his sights. The acquisition announcement is net positive for [Novell SuSE](http://www.novell.com/products/linuxenterpriseserver/) “in light of its relationship with IBM. We might also now expect to see IBM reaching out to the Debian community. If you want to divide and rule, you need options to balance against each other. Red Hat is now a more troublesome partner than it was. We now have a new [top reason why IBM could support Debian](http://www.redmonk.com/sogrady/archives/000304.html). The deal shines a clear focus on the Linux market. Can IBM really afford not to be in control of its own distribution for the long term? Sure Linux can be swapped out but ISV relationships and hardened environments at customer shops can’t. Let’s not forget that IBM already paid Novell $50m to strengthen the relationship. BEA will continue its push up the stack towards SOA, to avoid industry commoditisation. The deal doesn’t have particularly significant ramifications for Microsoft. SAP will likely appreciate the deal. One less partner to manage. What about cultural fit? I think the cultures are actually pretty well aligned. For one thing, JBoss and RedHat are both, in the immortal words of Peter Mandelson, "[intensively relaxed about people getting filthy rich](http://www.guardian.co.uk/Columnists/Column/0,,325036,00.html)". That is something that could serve to bind Marc Fleury and Matthew Szulik [together](http://www.redhat.com/about/news/prarchive/2006/jboss.html). > Red Hat will acquire JBoss for approximately $350 million in initial consideration, plus approximately $70 million subject to the achievement of certain future performance metrics. "Certain future performance metrics"… I assume that Marc is tied in for a little while. In summary, the combination is probably more worrying for IBM than an Oracle JBoss combo would have been. For customers meanwhile there is a fair amount of upside, not least in potential software licensing savings.