In his keynote speech at the Red Hat Summit in Boston, Red Hat CEO Jim Whitehurst made the case that of the $1.3 trillion USD spent in 2009 on Enterprise IT globally, $500 billion was essentially wasted (due to new project mortality and Version 2.0-itis). Moreover, because the purpose of IT spending is to create value (typically $6-$8 for each $1 of IT spend), the $500 billion waste in enterprise IT spending translates to $3.5 trillion of lost economic value. He goes on to explain that with the right innovations—in software business models, software architectures, software technologies, and applications—we can get full value from the money that's being wasted today, reinforcing the thesis that innovation trumps cost savings.

But then along comes Accenture's Chief Technology Architect Paul Daugherty, and in his keynote he presents a list of the top five reasons that customers choose open source software (which is now up to 78% among their customers):

#1 (76%): better quality than proprietary software.

#5 (54%): lower total cost of ownership.

So which is it? Does innovation trump cost savings? Or does quality trump cost savings?

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Red Hat has launched a comprehensive package, called Red Hat Cloud Foundations, that will allow organizations to run applications in both public clouds and their own private clouds.

With this release, Red Hat is one of only two companies that offer a complete package for running a hybrid cloud, said Scott Crenshaw, vice president and general manager of Red Hat's cloud business unit. The other company is Microsoft, with its Azure platform.

Every industry follows the same weather pattern.

After a niche is established several vendors form. They then form alliances before consolidating into a form that can rain down money on a grateful public.

This is now in the process of happening with clouds, and open source has a big stake in the game.

We talked a lot about Red Hat last week. Their alliance with IBM is an open secret. Eucalyptus, under Marten Mickos, is now appearing to ally itself with HP, and trying to drag Ubuntu into the alliance with it.

Red Hat, meanwhile, identifies VMWare as its chief competitor, and its enterprise Linux rival Novell is tied up with VMWare.(My son John took this picture of clouds in North Carolina, where Red Hat is headquartered.)

You will notice that some names are missing in this analysis. Microsoft. Amazon. Oracle. Google. That’s because, for now, the management of clouds and the open source cloud software stack are different businesses. But don’t expect that to last.

It’s the sort of game I have seen many times before in my years as a tech reporter. And that’s what worries me.

This is the “great game” CEOs and Wall Street play, with big companies holding poker hands close to the chest, and sometimes taking out other companies (even whole industry niches) on the smallest pretense.

More important, the nature of the game is closed. The construction and destruction of corporate alliances is an insider’s game.

It’s a game open source has never played. It’s not a game open source executives — even experienced ones like Jim Whitehurst of Red Hat and Marten Mickos of Eucalyptus — are experienced at playing.

The future of these open source vendors, and open source itself, could be riding on what happens in the cloud, and we’ll never know what that was until the results rain down on us.

Read more of this story at Slashdot.

Read more of this story at Slashdot.

At its Boston developer summit Red Hat is pushing the theme that every company can have its own cloud with the first in a line of Cloud Foundation tools.

The offering includes new JBOSS and KVM hypervisor and VMWare support software, a white paper, and a closer relationship with Microsoft.

All this is meant to assure “c-level” executive types that building clouds on Red Hat won’t be a technological cul de sac, and that other big vendors have its back, as it works to make the Internet one cloudy sky.

Red Hat also made some Wall Street friendly news, with solid growth in revenues and earnings as well as more share buybacks.

What’s going on is a strategic move to lead boardrooms toward virtualizing their entire infrastructure, the kind of “big iron” evolution you normally associate with a Microsoft or an IBM. As big rivals move more into high-revenue services, Red Hat aims to be a friendly, neutral “Switzerland” for the software needed to make it work.

This is possible because open source makes the code transparent. Proprietary code would be hidden from view, leading to FUD back-and-forth and interminable delays in making a “bet the company” move. This way everyone’s revenues are maximized, and top management is given the assurances needed to move.

This doesn’t mean proprietary technology has no place. Red Hat is merely placing itself at the center of the new ecosystem, making the software “glue” that keeps everything together.

The hope is this becomes a commodity business, a profitable revenue generator for years to come, with open source at the bottom of the stack and Red Hat as a key support vendor for that software.

This is the second major technology transition in the open source era — the move to Web-based services was the first — and the role of open source seems more central this time, even as the task ahead appears more difficult.

On 16 June Project Harmony had its first official meeting in Boston, and we're planning another in London on 1st July at Canonical's offices.  Its initial goal is to avoid proliferation in contribution agreements across FOSS software projects where those organisations chose to work with contribution agreements.

A Canonical instigated project, being led by their General Counsel, Project Harmony is open to all interested parties to join. It presently involves a group of industry interested parties, from companies, projects and those with personal interests in FOSS.

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As Red Hat launches a cloud strategy and inks a deeper virtualization partnership with Cisco Systems, Red Hat CEO Jim Whitehurst has a cautionary message for VMware partners. Indeed, Whitehurst claims VMware over the next few years will suffer the same fate as Sun Microsystems. Admittedly, he didn’t use those “exact” words — but draw your own conclusions based on this report…

During an interview with The VAR Guy this week, Whitehurst said Red Hat Enterprise Virtualization (RHEV) already beats VMware vSphere on scalability and performance. However, Whitehurst concedes RHEV needs enhancements to match VMware’s management tools.

Still, Whitehurst says RHEV will leapfrog VMware the same way Red Hat Enterprise Linux (RHEL) eventually gained management features and leapfrogged Sun Microsystems’ installed base for Solaris on SPARC.

But will RHEV vs. VMware really repeat the RHEL vs. Solaris outcome? Hmmm… In this FastChat video, Whitehurst says channel partners are helping Red Hat to line up more than 500 RHEV customers in North America this year:

Click here to view the embedded video.

Within the video Whitehurst covers:

• 0:00 – Red Hat’s push to transform from a Linux, middleware and virtualization company into an infrastructure software provider for cloud services.
• 1:08 – Red Hat’s progress in the middleware and virtualization markets.
• 2:25 – Open source’s role in the cloud.

Still, competing against VMware won’t be easy. VMware has a huge following, a massive channel program, and plenty of customers who know vSphere can help to cut server hardware acquisition requirements while improving utilization rates.

The old Sun Solaris business model didn’t have that type of channel following — though Oracle (Sun’s current owner) is working to certify more Sun server and storage partners. Update, June 25, 2010: And Oracle says it has restored Sun to profitability.

But back to the story at hand. Eager to bolster its position, Red Hat has:

• inked an expanded virtualization partnership with Cisco Systems;
• unveiled Red Hat enterprise Virtualization 2.2; and
• announced a new strategy for cloud computing and partner programs.

Red Hat and Cisco have broadened their relationship by integrating Cisco VN-Link and Red Hat Enterprise Virtualization.

Cisco and Red Hat want to simplify datacenter deployments, and integration of the Cisco Unified Computing System Virtual Interface Card with the Kernel-based Virtual Machine (KVM) hypervisor included in RHEV helps visibility, control and consistency in a networked filled with virtualization, all without sacrificing performance, Red Hat and Cisco claim.

The entire  solution is expected to ready from both Red Hat and Cisco later in 2010 with the coming availability of Red Hat Enterprise Linux 6 related virtualization updates.

The VAR Guy thinks Cisco could give RHEV a lift, but it’s important to note Cisco also has a close working relationship with VMware.

On the virtualization front, Red Hat Enterprise Virtualization 2.2 has arrived, designed to overcome ’scalability barriers’ and comes complete with migration tools and enhanced security, including the arrival of Red Hat Enterprise Virtualization for Desktops, Red Hat says.

RHEV 2.2 can handle hosting and managing Windows and Linux, and provides a single infrastructure to manage both desktops and server virtual machines. RHEV 2.2 also allows for Hosted Virtual Desktop (HVD) configurations or Virtual Desktop Infrastructure (VDI), plus open source SPICE remote rendering technology, for multimedia experiences when virtualization, allowing for multiple monitors, HD-quality video and bi-directional audio/video for video conferences. There’s also a V2V tool for converting VMware or Xen VM’s along with the support for the Open Virtualization Format (OVF) image, Red Hat says.

Meanwhile, Red Hat Cloud Foundations is a new service offering for building and managing Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) private and public clouds. Every offering includes cookbooks, expert services, training and easy implementation. The idea is to expand cloud technology and make it easier and more appealing to deploy one.

Cloud Foundations: Edition One is ready now and will provide information on implementing a private cloud, including Red Hat Enterprise Linux, Red Hat Network Satellite, Red Hat Enterprise Virtualization, JBoss Enterprise Middleware and Red Hat Enterprise MRG Grid.

The Red Hat Certified Cloud Provider Program will certify vendors in cloud capabilities. Once certified, Certified Cloud Providers can run all supported virtualization solutions from Red Hat Enterprise Virtualization, VMware and Microsoft.

There’s a lot of strategic chatter in this blog post. But ultimately, the story boils down to this: Red Hat’s Whitehurst thinks RHEV will leapfrog VMware in the coming years.

That’s a lofty goal. The VAR Guy will be watching to see if Whitehurst can fulfill that prediction. And certainly, The VAR Guy needs to check in with VMware for their side of the story.

Additional reporting by David Courbanou. Sign up for The VAR Guy’s Newsletter, Webcasts and Resource Center. And follow him via RSS; Facebook, Identi.ca and Twitter.

• Six Channel Blogs The VAR Guy Didn’t Write: June 25
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In this morning's Red Hat Summit sessions, Jean Staten Healy and Bob Sutor of IBM presented on the solutions that communities around the world are implementing using Linux as a catalyst for a smarter planet.

The IT industry exists to solve problems. And you can solve them at a micro level, or you can look problems that are so huge, they affect countries, or the entire world. The range is huge, and complexity varies tremendously. Smarter Planet is about a macro approach. It's meant for those really significant problems and to answer how IT can help solve those problems.

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All right, I get it. The iPhone is certainly a leader in both terms of sales and product ingenuity. I have often been known to blast Apple for being late to a party, then claiming they are introducing some incredible new feature (see Spaces vs Virtual Desktops). I won't hide the fact that I am not a fan of Apple. Even so, the iPhone is truly something innovative.

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Red Hat is not as precisely coupled to the economy as many other IT players. Throughout the Great Recession, Red Hat got its brim a little wet, but it never blew off Wall Street's head and got trampled in the mud like so many other companies. And as the economy recovers, the commercial Linux operating system and JBoss middleware distributor is growing at more or less the same rate – like nothing ever happened.…

Free On-Demand Webcast - Virtualizing the Hard Stuff

Red Hat has hired a Novell veteran to lead the Red Hat Enterprise Virtualization (RHEV) push into the IT channel, The VAR Guy has learned. Kevin Pereau, Novell’s former director of ISV ecosystems, joined Red Hat about six weeks ago. Here’s the update, plus a closer look at how Red Hat plans to position RHEV against VMware vSphere and and Microsoft Hyper-V.

At Red Hat Partner Summit in Boston, Pereau and Navin R. Thadani (senior director of Red Hat’s virtualization business) sat down with The VAR Guy about an hour ago. Pereau said he joined Red Hat to help drive RHEV product marketing, and he’ll work closely with Red Hat North American Channel Chief Roger Egan and Global Channel Chief Mark Enzweiler.

The RHEV push stretches all the way up the CEO position, where Jim Whitehurst says RHEV is a lower-cost, higher-performing alternative to VMware, though Whitehurst concedes RHEV needs to match VMware’s overall management tools.

Meanwhile, Thadani claims RHEV offers channel partners four key advantages over rival virtualization options:

1. Unmatched performance and scalability.
2. A proven security infrastructure, based on Red Hat’s experience with  Linux security.
3. An ecosystem of hardware and software partners.
4. Cost savings that deliver more profits to partners. In one scenario, Thadani claimed RHEV delivers (US)$1.70 in partner profits for every $1.00 of RHEV sold, compared to $0.40 in profits for every $1.00 of VMware sold.

Of course, it’s difficult for The VAR Guy to confirm or dismiss those profitability claims.

Even if RHEV offers cost benefits over VMware, some channel partners tell The VAR Guy they’re sticking with VMware because of that platform’s proven management tools and VMware’s proven ability to save hardware dollars while improving server utilization rates.

Still, you can bet Pereau will be working closely with Thadani and the Red Hat channel team to recruit and certify RHEV partners. Red Hat announced a channel specialization for RHEV partners in mid-2009. The VAR Guy will be checking Red Hat’s latest financial results (scheduled to be announced this evening) to see if Red Hat discloses how RHEV is performing so far.

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• Red Hat CEO Predicts VMware Will Suffer Sun’s Fate
• Red Hat Virtualization: Cheaper Than VMware, Microsoft?
• Red Hat Summit: Even Microsoft Will Lend a Virtualization Hand
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• Red Hat vs. VMware: Is the Data Center War Real?

This open thread is an opportunity for you to tell us how you explain what the open source way is, but without mentioning software or technology.

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Red Hat CEO Jim Whitehurst (pictured) says open source can exist without cloud computing, but cloud computing can’t exist without open source. Whitehurst shared that nugget — and about a dozen other thoughts — during an interview with The VAR Guy at Red Hat Partner Summit in Boston. Here’s a recap of the conversation and a look at where Red Hat is heading next.

For the sake of fast blogging, all of the nuggets below are paraphrased. But the bullet points and FastChat video capture the essence of Whitehurst’s thoughts. Here we go…

Click here to view the embedded video.

Among the thoughts Whitehurst shared…

1. Old IT models don’t scale: Twenty years ago, your best IT experience was at work. Now, the best IT experience occurs in the home and it’s often absolutely free, thanks to services like Google, FaceBook and Twitter, Whitehurst says. As a result, CIOs and partners need to adjust their mindsets. Which brings us to point two…

2. Don’t sell functionality: CIOs don’t want features and functions. They’ve got enough of those. Instead, they want employees to “use what they want, when they want to” with subscription type payment models, Whitehurst says.

3. More Thank Linux: Red Hat has the benefit of being the Kleenex brand of Linux, Whitehurst asserts. But Whitehurst wants partners and customers to remember that Red Hat has a broader product portfolio that features JBoss middleware and virtualization. He views Red Hat as an open architecture company, allowing customers and partners to mix and match Red Hat components with third-party software.

4. Red Hat vs. VMware: Some critics allege that Red Hat’s virtualization strategy is purely based on price benefits vs. VMware. But Whitehurst sees the strategy differently. On a performance front, Whitehurst says Red hat Enterprise Virtualization (RHEV) beats VMware. But when it comes to management tools, Whitehurst concedes Red Hat is in catch-up mode.

Still, Whitehurst compares today’s Red Hat vs. VMware to the old Red Hat vs. Sun Solaris war. Initially, Red Hat beat Solaris on price. But over time, Red Hat’s Linux story gradually gained more and more management capabilities. The same trend will repeat itself with RHEV vs. VMware, Whitehurst assets.

5. On Acquisition Rumors: Two sources tell The VAR Guy that Red Hat may be looking to acquire Groundwork Open Source. Whitehurst says Red Hat doesn’t comment on rumors. But he says Red Hat has ongoing business relationships with Groundwork and other systems management companies.

6. On A Rumored Business Intelligence Strategy: Reports in 2009 suggested that Red Hat was going to make deeper moves into the BI market. Whitehurst confirmed that Red Hat still has an investment in Jaspersoft, though Whitehurst says Red Hat also maintains close relationships with Pentaho and SAP, among other BI specialists.

7. On Red Hat in Small Businesses: Cloud computing represents Red Hat’s doorway into small businesses, Whitehurst says. He added that 90 percent of today’s clouds leverage Red Hat’s software.

8. On the Cloud Potentially Stealing Open Source’s Thunder: Whitehurst said that wasn’t the case. Pointing to Amazon Web Services and Google, Whitehurst asserted that the cloud can’t exist without open source. Of the major cloud strategies, only Windows Azure seems to be closed source, Whitehurst added.

9. On the database market: Red Hat will continue to work closely with a range of database partners rather than betting on one database, Whitehurst said. The reason: Databases are not commodities. No single database, he added, does everything great. In terms of raw numbers, Red Hat’s biggest database partner is Oracle. But Red Hat will continue to work closely with IBM DB2, Enterprise DB, Ingres, MySQL (now owned by Oracle) and other options, he added.

10. On emerging market opportunities: In recent quarters, oil and gas customers have increasingly landed on Red Hat’s top customer lists.

11. On Red Hat and the desktop Linux market: Red Hat will make “some” but “not a lot” of effort in the desktop market. Whitehurst says he wishes “Ubuntu all the luck in the world but I don’t know why anyone would pay for desktop Linux. The demand is there but how do you monetize it?”

Red Hat will continue to develop and promote its desktop Linux offering, but the far greater priority for Red Hat is a Virtual Desktop Infrastructure (VDI) push, Whitehurst said.

Red Hat is set to announce quarterly results tonight (June 23). The VAR Guy will be listening for more clues about the company’s business performance and strategy.

Sign up for The VAR Guy’s Newsletter; Webcasts and Resource Center; and via RSS; Facebook; Identi.ca; Twitter and VARtweet.

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Market confidence is a valuable commodity in tough economic times. And governments will try just about anything to inspire some.  Recapitalization--bailouts--for struggling sectors is one approach.  Another (less deficit-inducing) solution seeks to inspire confidence through a sizable dose of transparency. Bank stress tests are beginning to figure prominently in the later effort.  Stress tests measure how well financial institutions perform under financial "what if" scenarios. 

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If you have ideas on articles about music that you'd be interested in, let us know in the comments. We'll do our best to tune-up a blog post.

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It might be a better world if we all worked in open, collaborative organizations where the best ideas win. But unfortunately, the reality is that bureaucracy still rules in all but the most progressive companies. We have a long way to go. The reality doesn’t always match the dream.

In the real world, we generate great ideas, propose elegant solutions, and then force them to run the bureaucratic gauntlet. “the best ideas win” becomes “the safest ideas win” (and then lose eventually) as they travel through the bureaucracy and its meetings.

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