Rivals Microsoft and Red Hat Reach Linux Deal
November 04 2015 - 8:40AM
Dow Jones News
Microsoft Corp. and Red Hat Inc., longtime rivals from
conflicting camps of the software industry, plan to collaborate in
the cloud.
The companies are announcing a partnership Wednesday to make Red
Hat's version of the Linux operating system available to users of
Microsoft Azure, the software company's cloud service.
Under the deal, Microsoft agreed to designate Red Hat's Linux as
its "preferred" option for enterprise-style computing jobs on
Azure. In addition, personnel from both companies will work
together in Redmond, Wash.—Microsoft's hometown—to offer technical
support to customers.
No financial elements of the deal are being disclosed.
Microsoft, best known for the Windows operating system and other
personal computer programs, established itself in an era when
companies held the underlying source code used to make software as
a trade secret.
Red Hat, by contrast, is a standard-bearer for open source
software, which is typically available in free versions whose
programming instructions can be viewed, modified and distributed
freely. The company sells a popular Linux version that many users
prefer because it comes with regular updates and bug fixes.
While Microsoft fought for years against Linux and other open
source programs, the company has gradually relaxed that stance to
court startups and corporate programmers that have embraced such
software.
Another motivation is making Azure more competitive in the
market for cloud services, which handle computing workloads for
other companies that might otherwise have to buy their own
hardware. Though Microsoft already supports some versions of Linux
on Azure, it hasn't previously offered Red Hat's variant.
"You've seen Microsoft change quite a bit," said Scott Guthrie,
executive vice president of Microsoft's cloud and enterprise
division. "Ten years ago, people would never have imagined" some of
the company's recent partnerships, he said.
The deal should benefit both software makers as Red Hat's
corporate customers move to Azure, said Al Hilwa, an analyst with
International Data Corp. "These are the first-class travelers on
the cloud," he said.
The deal's unusual joint technical support structure is designed
to make sure customers get problems resolved without having to go
back and forth between separate service teams, the companies said.
Besides Linux, Microsoft plans to allow Azure users to take
advantage of other Red Hat programs such as JBoss.
Red Hat, based in Raleigh, N.C., already benefits from being
offered on Amazon.com's cloud service and competing platforms.
Analysts at Deutsche Bank estimated in a research report issued
Tuesday that Amazon accounts for almost half of the roughly $100
million in revenue Red Hat gets through cloud services and
predicted that a deal with Microsoft could lift both companies'
stock prices.
But the rapprochement doesn't mean the two competitors agree on
all fronts. Microsoft is known for aggressively seeking royalties
from its software patents. Red Hat, by contrast, has publicly
pledged not to enforce its patent rights in ways that could
discourage the development of open source applications.
"We both know we have very different positions on software
patents," said Paul Cormier, Red Hat's president for products and
technologies. "We weren't expecting each other to compromise."
Write to Don Clark at don.clark@wsj.com
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(END) Dow Jones Newswires
November 04, 2015 08:25 ET (13:25 GMT)
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