Red Hat hit a milestone, posting $1 billion in revenue for the fiscal year. Not bad for a company that originally made money by selling telephone support for an upstart open source operating system. Despite this success, Red Hat has floundered in the virtualization market. By most estimations, it’s battling Oracle for fourth place, behind VMware, Microsoft and Citrix Systems, respectively. In many ways, Red Hat is the T-Mobile of virtualization.
Looking beyond their positions in their respective markets, both Red Hat and T-Mobile share a number of similarities.
In a recent interview with Ars Technica, Red Hat CEO Jim Whitehurst admitted that VMware virtualization is ahead of his company’s offering – which isn’t much of a shocker. Red Hat Enterprise Virtualization 3.0 does some nifty stuff, but it still lags behind vSphere 5 in a number of areas, including storage live migration and the amount of RAM you can assign to VMs.
The same argument can be made for T-Mobile: It’s playing catch-up with the competition. For starters, T-Mobile hasn’t deployed a true 4G network. Unlike AT&T and Verizon, which are rolling out nationwide LTE networks, or Sprint, which uses WiMAX, T-Mobile uses HSPA+ to deliver faster wireless speeds, but that technology is still considered 3G. (For all the nerds out there, I understand that LTE isn’t theoretically 4G. But that’s a discussion for a different day.) Also, T-Mobile’s selection of handsets leaves much to be desired. For goodness’ sake, it’s the only U.S. carrier that doesn’t offer the iPhone!
But the Red Hat and T-Mobile comparisons extend beyond both companies’ shortcomings. They provide a cost-effective and viable alternative to their competition. For example, a RHEV subscription nets you enterprise-grade features, such as high availability and distributed resource scheduling, for a fraction of VMware’s price. For organizations that are just beginning to virtualize or looking to add a second hypervisor, it’s hard to ignore the allure of a cheap and stable virtualization platform. (Although, I wonder if those IT shops would prefer Hyper-V, which comes with Windows Server.)
T-Mobile, for its part, offers dirt-cheap voice and data plans. When I look at its Classic Unlimited Plus plan, I’m ashamed of my monthly AT&T iPhone bill. T-Mobile makes sense for people who don’t want to fork over $100 a month for a smartphone. Ultimately, it’s great for customers and the wireless market, as a whole.
The U.S. Department of Justice and the Federal Communications Commission (FCC) seem to agree. They recently opposed a $39 billion merger between AT&T and T-Mobile for antitrust reasons. The FCC even said that T-Mobile was a “disruptive force” that keeps wireless carriers from raising pricing.
I won’t go as far as calling Red Hat a disruptive force in the virtualization market. But the capitalist in me believes that competition is good for buyers and sellers. And T-Mobile and Red Hat promote greater competition and apply pressure on their respective market leaders.