How badly is CentOS hurting Red Hat?

That’s the question asked in this article:

Why does Red Hat tolerate CentOS? The Community ENTerprise Operating System is an identical binary clone of Red Hat Enterprise Linux (minus the trademarks), compiled from the source code RPMs that Red Hat conveniently provides on its FTP site. It is also completely free, as in beer. CentOS provides no paid support, but it does track Red Hat updates and patches closely, and usually makes them available within a few hours or at most a few days of the upstream provider, which it refers to for legal reasons as “a prominent North American Enterprise Linux vendor.” Free support for CentOS can be found in numerous places around the web, and a few third parties offer modestly priced paid support for those who want it.

It’s easy to understand what CentOS is. The question is, how much business is it really taking away from Red Hat? The answer: probably more than you think. For a hint about what’s going on, check out this amazing comparative chart on Google Trends.

I used to think most CentOS users were either just fooling around and not really running production servers, or else were using it in small IT shops populated by Linux geeks with a do-it-yourself culture. But a recent conversation with a friend set me straight. (I published part of this conversation here.) My friend runs the web site of a big city daily newspaper. Although it’s not in the same league as the Wall Street Journal or the New York Times, it serves tens of millions of page views per month and pumps a big time advertising revenue stream into the coffers of the media conglomerate that owns it. The site is managed by a small in-house team and runs on several dozen dual and quad Intel servers with a classic LAMP stack that includes Apache, Perl, MySQL and of course Linux.

Until fairly recently they ran this web site on an old version of Red Hat with essentially no outside support. But they found that the up-to-date versions of the applications in their stack didn’t run so well on Red Hat 7.3, so they decided they needed to upgrade to something more recent. Naturally the first thing they looked at was RHEL 4 (this started a while back), and then RHEL 5. But they freaked out when they saw Red Hat’s prices. $1,299 per year for 24×7 support on the two socket version of RHEL 5, or $2,499 for the unlimited socket version. True, if you cut back to 12×5 support those prices come down, dropping to $799 and $1499 respectively. But even if they run RHEL on a mix of two and four socket machines, they’re still looking at $50K per year minimum for the privilege of sticking the little red logo on their servers.
Bottom line? They decided to go with CentOS 5, which they are now rolling out to their production servers.

So, is CentOS hurting Red Hat? I don’t think so, in fact I’d say it’s actually helping Red Hat. You see, the company mentioned didn’t balk on Red Hat because of anything but price. That means if they didn’t move over to CentOS, they would have moved to Debian, or Ubuntu, or Suse… or insert some gratis distro or direct Red Hat competitor here. Now, with a CentOS base let’s say the company grows or needs to run an app that is only supported on RHEL/SLES. What distro do you think they are likely to pay for in that scenario.

It goes further than that, though. Many members of the CentOS community are also valued members of the Fedora community. Red Hat gets Open Source at a very fundamental level and sees the benefit of this. Also, with no free version of their enterprise product, CentOS serves as a way to get broader exposure and therefore enables additional gratis testing for many RHEL bits. In the end I see CentOS and RHEL as more complimentary then competitive. I know it doesn’t appear that way at first glance, but when you really look at the market each is serving, it becomes a little more clear.

–jeremy

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One Response to How badly is CentOS hurting Red Hat?

  1. mbbx6spp says:

    I completely agree. I used to work for Red Hat and wouldn’t dream of using another OS for my projects, but I can’t afford the price tag of RHEL and Fedora is a little too cutting edge for my server needs, so CentOS is perfect. If any of my ventures pan out, you are absolutely right, RHEL would be the first commercial distro I would consider.

    I am glad others can see the merit of CentOS for Red Hat too, as many people miscalculate or misunderstand how it plays out in reality.

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