Why Red Hat should fear Amazon Linux

While Red Hat’s leadership in the enterprise Linux market is without question, the cloud tells a different story altogether. Red Hat’s cloud strategy has thus far focused too narrowly on customer retention, opening significant opportunities for Ubuntu to gain traction in the cloud — and gain traction it has, according to EC2 cloud market statistics.

Now comes Amazon’s Linux AMI, another threat to RHEL (Red Hat Enterprise Linux) in the cloud.

IT decision makers considering cloud investments should understand Amazon’s Linux AMI offering and its pricing versus Red Hat’s cloud wares.

Amazon’s RHEL-compatible Linux At its foundation, Amazon’s newly announced Linux AMI is based on CentOS, which in turn is based on RHEL.

Unlike Oracle when it announced its RHEL-compatible Linux OS, Amazon has not faced much negative press with its entry into Red Hat’s market — using an RHEL variant, no less. Perhaps this is due to Oracle’s targeting of Red Hat’s home turf, the enterprise, whereas Amazon is stepping onto an open playing field, one in which Red Hat has yet to establish itself against Ubuntu.

Customer interest in EC2-optimized Linux was central to Amazon’s decision to move forward with this new offering:

Many of our customers have asked us for a simple starting point for launching their Linux applications inside of Amazon EC2 that is easy to use, regularly maintained, and optimized for the Amazon EC2 environment. Starting today, customers can use Amazon Linux AMI to meet these needs.

Amazon further detailed some of the benefits of using the Amazon Linux AMI versus choosing another Linux AMI available on Amazon EC2 or building one’s own Linux AMI:

The Amazon Linux AMI is a supported and maintained Linux image provided by Amazon Web Services for use on Amazon Elastic Compute Cloud (Amazon EC2). It is designed to provide a stable, secure, and high performance execution environment for applications running on Amazon EC2. It also includes several packages that enable easy integration with AWS, including launch configuration tools and many popular AWS libraries and tools. Amazon Web Services also provides ongoing security and maintenance updates to all instances running the Amazon Linux AMI. The Amazon Linux AMI is provided at no additional charge to Amazon EC2 users.

Red Hat should be concerned about Amazon’s Linux AMI IT decision makers should note two key related points: First, the Amazon Linux AMI is provided at no charge for Amazon EC2 users beyond the service’s infrastructure charge, which starts at 8.5 cents per hour. Second, AWS Premium Support covers the Amazon Linux AMI, with plans starting at $100 per month or 10 cents per dollar of total monthly AWS charges, whichever is greater.

Contrast this with Red Hat’s pricing options for Amazon EC2.

Existing Red Hat customers who qualify have the option of repurposing their unused RHEL entitlements on Amazon EC2. In order to qualify, a customer must, among other requirements:

Have a minimum of 25 active subscriptions and move only not currently used Red Hat Enterprise Linux Advanced Platform Premium and/or Red Hat Enterprise Linux Server Premium subscriptions and have a direct support relationship with Red Hat.

New or existing Red Hat customers also have the option of using the Red Hat Enterprise Linux Hourly Beta, which is priced at $19 per month plus 21 cents per hour on top of Amazon’s EC2 infrastructure charge.

According to Red Hat, “Support for the Hourly Beta offering includes two-day, business-hour response and email-only support” for RHEL Hourly Beta customers. This level of support is equivalent to a RHEL Basic Subscription — priced at $349 per year, which translates to 4 cents per hour.

In effect, a customer would pay more than five times as much for RHEL Hourly Beta as they would deploying RHEL with an equivalent level of support in a traditional data center. On the other hand, this leaves Red Hat plenty of room to revise its pricing as the RHEL Hourly offering moves from Beta to general availability.

Meanwhile, with Amazon’s entry into the Linux OS market, enterprises now have the ability to run a RHEL-compatible Linux distribution with support from a trusted vendor for as little as $100 per month. A customer wishing to run more than 16 days, or 386 hours, a month of RHEL workload on Amazon EC2 could achieve a lower cost through the Amazon Linux AMI than they would with RHEL Hourly Beta.

Stay tuned for Red Hat’s response. As shown above, Red Hat’s current RHEL price premium for cloud environments is large enough that it could be vulnerable to competitive pressure.

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, “Why Red Hat should fear Amazon Linux,” was originally published at InfoWorld.com. Read more of Rodrigues et al.’s Open Sources blog and follow the latest developments in open source at InfoWorld.com.