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Customer Implications of the Microsoft Red Hat Partnership


Microsoft’s announcement to support RHEL on Azure underscores the continued shift and evolution of the software giant’s strategy. We believe Microsoft is fighting a multi-front war and has put cloud at the forefront of its arsenal. The company is demonstrating that customer-centricity means giving choice to users and Microsoft is becoming OS agnostic in the cloud. We believe from a customer’s perspective, this increases the utility of Microsoft and provides asset leverage to the huge installed base of Microsoft products.

New Direction

Fifteen years ago the Microsoft compared Linux (and open source software) to “communism”, with then CEO calling Linux a “cancer” as recently as 2010. Fast forward to 2015 and the Microsoft Azure cloud has somewhere between 25% and 33% of all deployed instances running Linux. While this is an incredible change in thinking for Microsoft and their customers in a short period of time, there was one flavor of Linux that was conspicuously missing from the Azure Cloud. That gap was filled this week as Microsoft and Red Hat announced a broad partnership to not only bring Red Hat Enterprise Linux (RHEL) to the Azure cloud, but a number of other technology collaborations to help customers better manage Windows and Linux environments in Private and Public clouds.

Maybe we should have seen this partnership coming together, as Alaska Air announced direct flights from Raleigh to Seattle in April. Engineers from both companies will be co-resident in Redmond to work through the technology integrations and to support customers.

The Basics 

  • Microsoft will offer support for Red Hat RHEL in the Microsoft Azure public cloud. RHEL images were already available on Amazon AWS, Google Cloud Platform, Rackspace, Virtustream, VMware vCloud Air and several other public cloud platforms.
  • Microsoft and Red Hat will provide joint support for customers of RHEL on Azure.
  • Microsoft will integrate Red Hat CloudForms (cloud management) with Microsoft Azure and Microsoft System Center, to simplify the management of Windows and Linux environments.
  • Expanded support for .NET application development on Red Hat RHEL and Red Hat OpenShift.


Microsoft Perspective

  • This announcement continues to signal the changing priorities for Microsoft under CEO Satya Nadella, both in terms of openness to non-Microsoft technologies and to continue to focus on Microsoft Azure.
  • As stated earlier, 25-33% of Microsoft Azure instances are already running on Linux, and this will continue to help Microsoft Azure appeal to a broader set of customers.
  • Between Microsoft Office on iOS and Android, Linux instances on Microsoft Azure, and Microsoft working closely to bring Docker container technology to Windows, it is becoming clear that Microsoft understand that they can not anchor the future of their business on the Windows platform. There are many more computing devices on the planet running non-Windows operating systems, so Microsoft is looking to expand the areas whether they change generate revenues.
  • Both Microsoft and Red Hat have common enemies and co-opetition in VMware and AWS, so this brings together new opportunities to transition customers in those markets.
  • Windows .NET is continuing to gain traction with the Platform-as-a-Service (PaaS) platforms, as .NET support has recently been added to both Red Hat OpenShift and Cloud Foundry.
  • The bottom line is this move signals that for Microsoft, the lifetime value of a cloud customer trumps bespoke software product dogma.

Red Hat Perspective

  • Red Hat continues to look for ways to expand their business outside of their foundation of Red Hat Enterprise Linux (RHEL).
  • Red Hat has stated that their Cloud Computing strategy is based on Hybrid Cloud, and this gives Red Hat a strong partner with Enterprise and web-scale presence to build that Hybrid Cloud foundation.
  • Adding support for .NET on the OpenShift platform is critical to gaining traction with Enterprise customers, where Java and .NET are still the dominant application development languages.

On the heels of the Oracle Cloud Platform announcements a week ago, this announcement is important for customers that have applications portfolios that involve more than Oracle applications. Customer now have a broader choice of both public cloud platforms, but also additional viable choices when designing Hybrid Cloud environments. Microsoft customer may also begin to consider the OpenShift platform as they look to ensure that they can have multi-cloud application portability in the future for their Cloud Native applications.

Action Item:

Microsoft is winning in cloud with a strategy that leverages its enormous installed base. According to Wikibon share forecasts, the company is #1 overall in public cloud (SaaS, PaaS & IaaS) and moves like this Red Hat partnership further solidify the company’s commitment to supporting customer requirements. We believe customers should asses how to leverage existing investments in Microsoft software and determine where traditional on-prem app dev resources can be combined with Microsoft’s broader cloud offerings. We believe a major focus should be Active Directory. In our view, creating seamless integration between Active Directory and RHEL will extend the return on existing assets and create a leverage point for customers to drive increased productivity.

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