Global Headquarters: 5 Speen Street Framingham, MA USA P F

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1 Global Headquarters: 5 Speen Street Framingham, MA USA P F WHITE PAPER Why Linux Is Good for ISVs Sponsored by: Red Hat and Intel Julie Tiley August 2005 IDC OPINION In IDC's opinion, Red Hat and Intel perform well across the three major factors that can influence an independent software vendor's (ISV) decision to partner with a software vendor:! The degree of customer demand pull! The resources and benefits provided to partners! The ease of doing business with the vendor IN THIS WHITE PAPER This IDC White Paper examines the market opportunity for enterprise Linux products and services and the position of Red Hat and Intel's collaborative solution set in that market. It discusses the key resources Red Hat provides to ISVs to help them port and build applications to run on Red Hat Enterprise Linux and presents IDC's opinion on Red Hat and Intel's value proposition for ISV partners. THE LINUX OPPORTUNITY The growth of Linux operating environments and products is continuing along the path from upstart invention to enterprise competitor. IDC forecasts the market for application and infrastructure software on Linux to grow to $14.2 billion by 2008, representing a compound annual growth rate (CAGR) of 44.3% from 2003 (see Table 1). Factors that make enterprise-oriented Linux products attractive to customers consist of longer and more predictable support life cycles, including security patch life cycles, combined with extensive certifications on industry-standard hardware platforms, such as Intel EM64T, Intel Xeon, and Intel Itanium 2 processor based servers.

2 TABLE 1 Worldwide Application and Infrastructure Software on Linux Customer Revenue by Region, ($M) CAGR (%) Americas 1,167 1,863 2,835 4,221 5,751 7, Growth (%) NA EMEA 802 1,240 1,909 2,813 3,745 4, Growth (%) NA Asia/Pacific ,212 1,639 2, Growth (%) NA Total 2,265 3,640 5,564 8,246 11,135 14, Source: IDC, 2005 According to IDC's worldwide server shipment forecast, Linux server shipments will experience a CAGR of 25.5% from 2003 to 2008; in contrast, Windows server shipments will experience a CAGR of 13.5%. Table 2 shows the forecast for new license shipments of Linux server operating environments (SOEs). Paid licenses, which are typically enterprise products, are growing more than twice as fast as nonpaid licenses. TABLE 2 Worldwide Linux Server Operating Environment New License Shipments, (000) CAGR (%) Paid 1,026 1,210 1,465 1,746 2,100 2, Growth % Nonpaid ,048 1,155 1, Growth % Total 1,876 2,118 2,417 2,794 3,255 3, Growth % Source: IDC, #IDCUS05WP IDC

3 Intel and Red Hat are the leading providers in their respective markets. Intel leads the market in the delivery of its 32-bit and 64-bit Intel Xeon and Itanium processor based server platforms. Red Hat's 53.3% share of the worldwide Linux operating environment new license and upgrade/maintenance shows its acceptance. Red Hat is the leading provider of enterprise operating systems and related system management services based on open source technology. Under the open source development model, software developers provide access to both the binary (compiled) code and source code, along with the rights to copy, modify, alter, and distribute the software. The Linux kernel is one of the better-known open source technologies, and it is the engine of Red Hat's Linux-based operating system. Red Hat sells its technologies and services in the form of annual subscriptions on a per-server basis. The base subscription entitles customers to one year of maintenance, which includes configuration support and updates made available during the term of the subscription. Red Hat shares its improvements to the Linux kernel and other open source products with the development community. Therefore, ISVs have full access to code that helps them in their own development projects. Although customers are free to modify and redistribute Red Hat Enterprise Linux, they are not permitted to refer to the modified versions as "Red Hat" products, and they may only use subscription services from Red Hat on servers for which they have purchased subscriptions. THE ROAD TO SUCCESS For Intel and Red Hat, customer adoption of industry-standard platforms and Linux operating environments relies heavily on the availability of certified and supported applications. Consequently, while having a bits-and-bytes technology partnership is an important facet of the relationship between the two companies, perhaps a more important facet is the provision of strong, complementary ISV partner programs. Intel Intel provides an array of products and tools for compiling, analyzing, testing, and tuning that enable ISVs to optimize their applications for 32-bit and 64-bit environments. Intel's software resources are a natural complement to its hardware platforms, supporting the convergence of savvy programming skills and in-depth knowledge of the hardware platforms on which an application will run. ISVs that sign up for Intel's developer services also benefit from the company's expertise in the mechanics of moving from 32-bit to 64-bit architectures, such as threading, scaling, and virtualization, via Intel's Software College training courses and access to next-generation architectures, with prerelease development platforms, technology road maps, and marketing programs to help generate product interest and demand. In addition, Intel offers ISVs numerous developer services through the Intel Developer Services Portal ( and the Intel Software Network ( IDC #IDCUS05WP

4 Red Hat Red Hat's goal is to make it as easy as possible for ISVs to support its Enterprise Linux product family. Red Hat achieves this goal through three main avenues:! Its partner program, which offers three levels of participation that reflect different sizes of companies, levels of commitment, and types of technologies! The Red Hat Developer Connection, which enables communication and collaboration by providing developers with a reference platform, tools, and resources to build applications on the Red Hat Open Source Architecture! Access to Red Hat's support and training offerings at discounted rates Notable Benefits of a Red Hat Relationship Red Hat provides ISVs with Red Hat Enterprise Linux licenses to use in development, porting, and testing activities. The company launched a portal specifically for ISVs, which provides access to technical information, Web-based training, live chat, and online forums. In addition, Red Hat leverages its relationships with Oracle and IBM to offer ISVs access to testing facilities in Europe (IBM's Innovation centers) and Asia (Oracle's LEAP center in Singapore). Red Hat expects its ISV partners to support the Enterprise Linux platform in the same manner as other platforms on which their applications may run. To that end, Red Hat provides technical and process guidelines for interoperability, which include file naming conventions and other practices that will ensure that an ISV's applications won't conflict with each other or other Linux components. By ensuring that an application adheres to the Red Hat Certified application guidelines, an ISV partner can certify its application as Red Hat Ready. This status entitles ISV partners to list their applications in an online catalog and provides access to the Red Hat Ready logo. Currently, 1,800 applications are certified as Red Hat Ready, which is indicative of the momentum being experienced in the Linux market. The online software catalog allows prospective customers to find software that runs on Red Hat Enterprise Linux by type of application (e.g., CRM, security, or network management), platform, or vendor. Partners have the ability to update the catalog themselves, as they add or change their offerings. The catalog includes products from many high-profile software vendors, including BEA, BMC, Hyperion, IBM, and Oracle. ISVs can promote their own relationships with major software vendors by identifying their affiliations. Thus, customers can search for Red Hat partners that also have a relationship with their preferred technology suppliers. Red Hat also certifies hardware, which means that partners can offer solutions that are completely Red Hat compatible on the full range of Intel 32-bit and 64-bit industry-standard platforms. Through the Red Hat Network service, Red Hat distributes software updates directly and immediately so that ISV partners always have the most current version of Red Hat Enterprise Linux. 4 #IDCUS05WP IDC

5 Red Hat provides a comprehensive development environment and continues to provide new features. The current gcc 3.4 tool chain provided with Red Hat Enterprise Linux 4 supports C/C++, Java, and Fortran. It also includes a growing number of debugging and profiling tools that allow profiling of kernel, module, driver, library, and user mode code and leverage Intel processor performance counters to identify instruction-grain behavior. The leading integrated development environment (IDE) for Linux is the open source Eclipse project. Red Hat provides Eclipse as the core component of its Red Hat Developer Suite products to customers as a free download. It includes a number of plug-ins that enhance the environment. Red Hat encourages its partners to participate in the open source community. Because of its established reputation, Red Hat can help its partners navigate the waters of open source and determine how best to contribute for mutual benefit. Two's Company, Three's a Team For application providers looking to take advantage of the rapidly growing demand for open source solutions deployed on low-cost industry-standard platforms, the combination of Intel's and Red Hat's partner programs should prove compelling. Both companies provide mature, complementary programs: Intel's programs focus on application profiling, performance, and architectural optimizations, and Red Hat's program focuses on the development environment and tool chain, ABI/API stability, and providing the necessary operating system capabilities. ISVs such as Hyperion are members of both companies' partner programs and benefit doubly in terms of technical coverage and marketing presence. By working with both Intel and Red Hat, ISVs are assured of receiving the latest and greatest development tools, information, and resources. By utilizing Intel and Red Hat's joint marketing programs, ISVs can bring their new features or new products to market much quicker and gain a competitive advantage in the marketplace. Spotlight on Hyperion's Partnership with Red Hat Hyperion provides Business Performance Management (BPM) products and solutions to more than 10,000 customers worldwide. BPM is a category of software that enables companies to translate their business strategies into plans, monitor the execution of the plans, and manage their financial and operational performance. Partnering with other technology companies is important to Hyperion in order to provide products that are compatible with heterogeneous environments. Hyperion understands that customers need to leverage the many different types of software, hardware, and technical infrastructure in which they have invested. Hyperion's relationship with Red Hat dates back to It was prompted by Hyperion's interest in open source as a path to reducing the total cost of ownership (TCO) of its software products and by a marked increase in customer demand for Linux. Hyperion selected Red Hat as its Linux partner of choice because of its market leadership position and its existing presence in the IT shops of current and potential customers. The relationship with Red Hat has two major dimensions: software development activities that focus on making sure Hyperion's products are optimized for the Red Hat platform 2005 IDC #IDCUS05WP

6 and go-to-market activities that focus on identifying opportunities and meeting customer needs. Hyperion's entire Business Intelligence Platform, which spans query, reporting, modeling, and analysis tools, is a comprehensive business intelligence offering on Red Hat Enterprise Linux. Red Hat and Intel provide many resources and benefits to Hyperion that help make the partnership successful. For Red Hat, the resources and benefits include development licenses, technical engineering support, product road maps, updates, and access to the Red Hat Network maintenance services. For Intel, they include deep technical resources, as well as training for technical, sales, and marketing staff members on the value proposition for the Intel platform. Hyperion also works closely with Red Hat and Intel on marketing initiatives to build mindshare and awareness and on aligning their sales activities for mutual benefit. The fact that both Red Hat and Intel have strong alliances with other top vendors in the technology market is also valuable to Hyperion because it provides the opportunity to generate opportunities for synergies within Red Hat's and Intel's ecosystems that would be more difficult to forge without them. From Hyperion's perspective, going with the Linux market leader was not a difficult choice. Hyperion reports that its partnership with Red Hat has been an extremely positive experience and that it continues to be impressed with the value that the partnership with Red Hat has been able to deliver to customers. PROVIDING VALUE TO THE ISV COMMUNITY IDC research shows that three major factors influence the decision to partner with a software vendor: the degree of customer demand pull, the resources and benefits provided to partners, and the ease of doing business with the vendor. In IDC's opinion, Red Hat and Intel perform well across all three of these dimensions. Customer Demand The current transition to enterprise-grade distributions of Linux running on Intel open standard platforms is fundamental to the long-term future of the Linux opportunity for ISVs and customers. The significant growth in Linux server operating environment revenue is directly related to increases in the Linux market revenue being generated by enterprise-grade Linux SOE products. In addition, IDC is currently tracking dramatic growth for Linux servers, which reflects a shift from using recycled or repurposed equipment and indicates that customers are taking their Linux installations very seriously and are spending accordingly. Red Hat believes its most valuable intellectual property is its portfolio of certified applications and hardware platforms. ISVs can leverage the unique and combined advantages of Intel and Red Hat. Resources and Benefits for ISVs Resources for technical enablement are among the most important facets of a partner program for ISVs. Red Hat places an emphasis on making sure ISVs have the development licenses they need to get their applications Red Hat Ready. Its new ISV portal provides a focal point for information and knowledge transfer for ISVs. 6 #IDCUS05WP IDC

7 ISVs can benefit from Red Hat and Intel's complementary partner programs. Not only do these partners lend credibility to Red Hat's position, they also create an ecosystem that is highly valuable to ISVs and their customers. Red Hat's commitment to the Open Source community is also an important point of leverage, as is the company's focus on engineering a comprehensive, technically advanced, reliable, and stable operating system based on open source technology. ISVs are able to take advantage of Red Hat's investment in providing a Linux operating system that can meet the reliability and scalability demands of large enterprises. Ease of Doing Business Red Hat's partner program accommodates many different categories and sizes of partners. All products in the Red Hat Enterprise Linux family share a common kernel, development tool chain, and libraries, allowing ISVs to certify their software only once for a single architecture. Red Hat understands that one of the keys to increasing the adoption of Red Hat Enterprise Linux by large enterprises is facilitating the migration of existing enterprise applications and the development of new third-party applications suitable for Linux-based operating systems. Anecdotal information from partners such as Hyperion gives credence to Red Hat and Intel's commitment to helping ISVs succeed and to minimizing any barriers to communication. Intel is committed to making software better because better applications enhance the customer experience, enable business productivity, and allow customers to get the most value out of their hardware investments. To that end, Intel's extensive array of software resources provides knowledge transfer and allows ISVs to take advantage of Intel's significant expertise when and where they need it. Intel, the Intel logo, Intel Xeon, and Itanium are trademarks or registered trademarks of Intel Corporation or its subsidiaries in the United States and other countries. All other trademarks are the sole property of their respective owners. Copyright Notice External Publication of IDC Information and Data Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Copyright 2005 IDC. Reproduction without written permission is completely forbidden IDC #IDCUS05WP