New Red Hat cloud offering poses high barrier to adoption

Red Hat’s cloud strategy appears focused on retaining existing customers, not attracting new customers.

There’s little argument that Red Hat is the undisputed leader in the enterprise Linux market by the measure that counts most: revenue. However, Red Hat’s position as the leading Linux vendor for cloud workloads remains in dispute at best, and far from reality at worst. All signs point to Ubuntu as the future, if not current, leader in the Linux cloud workload arena.

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First, data from the Ubuntu User Survey [PDF] decidedly points to Ubuntu’s readiness for mission-critical workloads, with more than 60 percent of respondents considering Ubuntu a viable platform for cloud-based deployments.

Second, statistics taken from Amazon EC2 and synthesized by The Cloud Market clearly point to Ubuntu’s leading position against other cloud operating systems in EC2 instances today. With these facts in hand, one could have expected Red Hat to take steps to grow Red Hat Enterprise Linux (RHEL) adoption in cloud environments. In fact, Red Hat’s Cloud Access marketing page makes a bold claim:

Red Hat is the first company to bring enterprise-class software, subscriptions, and support capabilities all built in to business and operational models that were designed specifically for the cloud.

However, Red Hat announced a program in which existing customers or new customers willing to purchase at least 25 active subscriptions of RHEL Advanced Platform Premium or RHEL Server Premium could deploy unused RHEL subscriptions on Amazon EC2. With the minimum support price of $1,299 for RHEL Advanced Platform Premium and a minimum of 25 subscriptions, the price of entry is $32,475. Well, you’ll actually need at least 26 subscriptions, so you can move subscription No. 26 to Amazon EC2 with full 24/7 Red Hat support. As such, the price of entry is $33,774.

I’m assuming that customers have to pay the full cost of Premium support per year even if the Amazon EC2 instance is not running 24/7/365. If it were otherwise, one would expect Red Hat’s marketing page to point out this nice feature. Additionally, once a customer elects to move an unused RHEL subscription to the Amazon EC2, the subscription must remain there for a minimum of six months, according to current eligibility guidelines.

These requirements seem at odds with the low cost of entry, ease of trial, selection and disposal, and pay per usage of software and hardware on public cloud infrastructure.

The other alternative is to use the beta of Red Hat Enterprise Linux on Amazon EC2 for a Basic EC2 server. This hourly beta offering provides unlimited email support with a two business-day response time at a cost of 21 cents per hour. This is a much easier way for customers new to RHEL to try it out in a cloud environment. If a customer decided to deploy cloud workload on RHEL requiring 24/7 support, they would, however, be faced with the $33,774 price of entry calculated above.

I wouldn’t be surprised if Red Hat and, frankly, other software vendors try several different pricing models before finding the approach that balances the vendor revenue potential from licenses deployed in customer’s data centers with the flexibility and freedom of pay-by-usage pricing in the cloud.

Follow me on Twitter at: SavioRodrigues. I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.”

This article, “New Red Hat cloud offering poses high barrier to adoption,” was originally published at InfoWorld.com. Read more of Rodrigues et al.’s Open Sources blog and follow the latest developments in open source and mobile computing at InfoWorld.com.