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But JBoss hasn't favored Linux over Windows, and Red Hat faces a cultural challenge in merging the startup into its corporate structure.
April 10, 2006
3 Min Read
Red Hat's $350 million purchase of JBoss, the open-source application server company, has the potential to create a new open source code powerhouse. That's because it moves Red Hat from being just an operating system distributor to a provider of a larger software stack, particularly in middleware.
Middleware software will generate an estimated $6.5 billion in revenue this year, predicts the research firm Gartner. This deal will let Red Hat tap that market by combining its own name-brand version of the Linux operating system with JBoss' growing Enterprise Middleware Suite. In addition to the JBoss application server, the suite includes Hibernate, considered one of the best pieces of open source code for mapping Java objects into relational databases; JBoss Portal; JBoss Rules, a rules engine; and coming in the second quarter, a JBoss Web server. Yet Red Hat's move will also bring it into direct competition with an old ally, IBM. IBM is a great supporter of the Linux operating system for running servers. But it has also been contributing developers' efforts to bulking up Geronimo, an open-source application server project of the Apache Software Foundation, which competes with JBoss. The Red Hat open-source combination will plunge Red Hat into the growing competition to become a general-purpose supplier of software for those rebuilding enterprise applications into a service-oriented architecture. IBM saw the potential for open source code to provide what it termed a starter kit for SOA last year when it acquired Gluecode, a startup that provided software and services around the Apache Geronimo application server. Now there's more startup activity in the area. A startup called LogicBlaze includes the Geronimo application server in its open-source stack, aimed at SOA projects. LogicBlaze is run by one of Gluecode's founders, Winston Damarillo. "Red Hat believes the combination, once consummated, will help accelerate the shift to SOA by making innovative, powerful solutions available to developers" who are seeking to lower deployment costs, said Matthew Szulik, Red Hat chairman, in a prepared statement on the acquisition. After Oracle acquired Sleepycat Software, maker of the Berkeley DB open-source database, in February, speculation abounded that JBoss was next on the Oracle acquisition list. But for reasons that haven't been disclosed, the two parties never reached agreement. It wasn't clear what role JBoss CEO Marc Fleury, known for his insistence on maintaining control of the JBoss code, could play inside a company driven so strongly by the personality of Larry Ellison. And Fleury was expected to extract a high price from any acquirer. Red Hat has agreed to pay $350 million now--40% in cash and 60% in Red Hat stock--and another $70 million if JBoss meets certain performance metrics. The deal is expected to be completed by the end of Red Hat's first fiscal quarter in May. Fleury will go into Red Hat as part of the deal, leading a new JBoss division within Red Hat. "I am staying on, reporting to RedHat’s CEO, Matthew Szulik, with direct responsibility for the JBoss organization," Fleury wrote in an April 10 blog on JBoss.org, the development site for JBoss. The deal brings together two of the strongest players in open source code, notes Steve Walli, VP of open-source development strategy for Optaros, an open source code consulting firm in Boston. But the two have different corporate cultures that could clash if the deal isn't consummated carefully. "JBoss has been enjoying explosive growth, just like a startup. Red Hat has been a public company now for seven years and has all the discipline of meeting its numbers that involves," he said. In addition, JBoss hasn't particularly favored Linux and instead has been relatively operating system-agnostic in its brief history. It runs under Linux, Solaris, and Windows, with Fleury remarking last fall as he signed a partnership with Microsoft that a significant portion of JBoss users were running it on Windows. "There's a huge opportunity for growth," Walli said. "But as with any acquisition, there is a certain amount of risk."
About the Author(s)
Editor at Large, Cloud
Charles Babcock is an editor-at-large for InformationWeek and author of Management Strategies for the Cloud Revolution, a McGraw-Hill book. He is the former editor-in-chief of Digital News, former software editor of Computerworld and former technology editor of Interactive Week. He is a graduate of Syracuse University where he obtained a bachelor's degree in journalism. He joined the publication in 2003.
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