Red Hat’s $136m acquisition of open source storage vendor Gluster marks Red Hat’s biggest buy since JBoss and starts the fourth quarter with a very intersting deal. The acquisition is definitely good for Red Hat since it bolsters its Cloud Forms IaaS and OpenShift PaaS technology and strategy with storage, which is often the starting point for enterprise and service provider cloud computing deployments. The acquisition also gives Red Hat another weapon in its fight against VMware, Microsoft and others, including OpenStack, of which Gluster is a member (more on that further down). The deal is also good for Gluster given the sizeable price Red Hat is paying for the provider of open source, software-based, scale-out storage for unstructured data and also as validation of both open source and software in today’s IT and cloud computing storage.
This is exactly the kind of disruption we’ve been seeing and expecting as Linux vendors compete with new rivals in virtualization, cloud computing and different layers of the stack, including storage (VMware, Microsoft, OpenStack, Oracle, Amazon and others), as covered in our recent special report, The Changing Linux Landscape.
While the deal makes perfect sense for both Red Hat and for Gluster, it also has implications for the white hot open source cloud computing project OpenStack. There was no mention of OpenStack in Red Hat’s FAQ on the deal, but there was a reference to ongoing support for Gluster partners, of which there are many fellow OpenStack members. OpenStack was also highlighted among Gluster’s key open standards participation along with the Linux Foundation and Red Hat-led Open Virtualization Alliance oriented around KVM. Sources at both Gluster and Red Hat, which point to OpenStack support being bundled into Red Hat’s coming Fedora 16, also reiterated to me Red Hat is indeed planning to continue involvement with OpenStack around the Gluster technologies. I suspect Red Hat is looking to leverage Gluster more for its own purposes than for OpenStack’s, but I must also acknowledge Red Hat’s understanding of the value of openness, community and compatibility. Taking that idea a step further, Gluster may represent a way that Red Hat can integrate with and tap into the OpenStack community by blending it with its own community around Fedora, RHEL, JBoss, RHEV and Cloud Forms and OpenShift.
The deal also leads many to wonder whether or what may be next for Red Hat in terms of acquisition. We’ve long thought database and data management technologies were areas where we might see Red Hat building out. This was also the subject of renewed rumors recently, and we believe it might still be an attractive piece for Red Hat given the open source opportunities and targets around NoSQL technologies such as Apache Hadoop distributed data management framework and Cassandra distributed database management software. We’ve also believed systems management to be a potential place for Red Hat to further expand. Given its need to largely stay within open source, we would expect targets in this area to include GroundWork Open Source, which joins Linux and Windows systmes in its monitorig and management, and Zenoss, which works with Cisco and Red Hat rival VMware in monitoring and managing systems with its open source software. Another potential target that would increase Red Hat’s depth in open source virtualization and cloud computing is Convirture, which might also be an avenue for Red Hat to reach out to midmarket and SMB customers and channel players. Red Hat was among the non-OpenStack members we listed as potential acquirers when considering the M&A possibilities (451 subscribers) out of OpenStack.
Given its recent quarterly earnings report and topping the $1 billion annual revenue mark, Red Hat seems again to be bucking the bad economy. We’ve written before in 2008 and more recently how bad economic conditions can be good for open source software. Red Hat is atop the list of open source vendors that suffer as traditional, enterprise IT customers such as banks freeze spending or worse, fail. However, the company’s deal for Gluster is yet another sign it is thriving and expanding despite economic difficulty and uncertainty.
You don’t have to just look at Red Hat’s earnings or take our word for it. On Jim Cramer’s ‘Mad Money’ this week, we heard Red Hat CEO Jim Whitehurst praised for Red Hat performance and traction where most companies and many economists are throwing the blame: financial services, government and Europe. Cramer credited Red Hat for a ’spectacular quarter’ and allowed Whitehurst to tout the benefits of the Gluster technology and acquisition, particularly Gluster’s software-based storage technology that matches cloud computing. It was quite a contrast to the news out of Oracle Open World, where hardware was a focal point.
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