The Real Sun versus Red Hat Story

In a recent Op-Ed article, George Colony, CEO, Forrester Research, pulled what I consider the equivalent of a CBS Memogate gaffe by telling us how Sun has an eight step plan to destroy Linux in conjunction with Microsoft. Having relationships with both companies in more than one capacity, Colony's article resonated with disinformation. My direct experience shows this to be untrue, and it moved me to write a rebuttal. I read George's editorial in the comment section of ZDNet U.K. -- not what I think most people would consider a serious section of the ZDNet universe.

Dan Rather stood in steadfast denial when several veteran technicians indicated that his memos were written in Microsoft Word. If you followed the reports, his experts even admitted they had problems with the documents. Some defenders even claimed that the type fonts and the superscript fonts existed in 1972. In a branch of psychology, when someone stands in front of another and simply lies convincingly, they call that "crazy making".

If Sun Microsystems intends to kill Linux, then why are they installing it internally? Why have they continued their relationship with Novell SUSE by building beta releases of the next Java Desktop System with GNU/Linux? Why does a separate business unit for Linux exist at Sun? Interesting questions after the CEO of Forrester Research wrote than Sun was banding with Microsoft to kill Linux.

Shortly after Colony's article appeared, Hiawatha Bray in a Boston Globe article quoted the Chairman of Sun: "We love Linux," said McNealy at yesterday's meeting of the Massachusetts Telecommunications Council in Newton. "We just don't love Red Hat."

Three days ago, in his Blog, Jonathan Schwartz wrote:

"I guess I did a miserably poor job of communicating with George Colony. And he didn't take me up on reading my blog. Red Hat does not equal linux, and linux is not evil. But, linux in the enterprise datacenter (that is, not your basement or startup or dorm room or gamebox) does equal Red Hat - and competing against a company is what we do for a living. Competing against a social movement we helped to found is a waste of energy, George. My fault for not more effectively communicating."

As I reviewed Colony's article, I felt that it appeared speculative and lacking any substantive quotes from Sun. I considered it an opinion piece. The vetting seems to have no authority other than Colony, the CEO of Forrester. It did create quite a controversy in the ranks of the open source world. It sounded convincing.

For an independent, part-time journalist like me, I find little else sweeter than an agenda oriented writer caught with his hand in the cookie jar. Regardless of ones political beliefs, finding Dan Rather at CBS with forged documents was wonderful. Catching a Microsoft advocate spawning a story like Colony's also provides satisfaction.

If Memogate ever contributes to breaking radical mainstream media bias, then it will serve all of us well. We might just have a crack at freedom of the press again someday. I'm just wondering if Memogate will fall over and slow down the thoughtless reporting of the technology media (and people like George Colony) as it did with politically biased journalists for the ten days following Rather admitting he made a mistake.

Will readers ever become skeptical of the Microsoft spin zone? Does technology reporting on Linux have a parallel with the political press? I believe it does. The media seeks to make money in their various ways. They seek to control what people believe by affecting those mechanisms of our perception. If you recognize the manipulation, you're unplugged. It takes special training to recognize disinformation.

Here's the unspun version

Red Hat has an employee head count of approximately 700. Globally, they have the most widely recognizable brand related to Linux. Some might consider Red Hat long on opportunities and short on bandwidth. They have more business opportunities than they do people to successfully capture those opportunities. The most famous Linux company is tiny in terms of size and capacity. They are still the flag bearer.

Red Hat reached their current status because they took advantage of excellent market conditions by offering a powerful operating system for commodity based hardware. They created a business plan that allowed them to collect significant fees with high gross margins in what you would call a subscription service model. So, Red Hat came along at the right time, with the right product. They lose business at times because they cannot provide service people want, but lost customers are not material to their revenue or their business model as it stands.

Red Hat has many quality people working for them. They are waking up to the fact that Novell poses a real threat in the market. As a result, many people at Red Hat have started to insist on a cultural change. They admit their own past arrogance as they attempt to face the realities of competition from Novell.

In contrast to Red Hat, Sun Microsystems has an employee head count of approximately 32,600. Globally, they have the most widely recognizable brand related to UNIX. Some might consider Sun an opportunity fulfillment machine. They have plenty of business opportunities and they can meet those needs. They find themselves in the middle of a major reorganization. They appear late in terms of the market shift to commodity based hardware. Those who do not understand Sun's business model do not realize how they have to adjust to a large and affluent customer base.

Much of the same kind of media bias and speculation we see today about Sun existed when I contracted at IBM ten years ago. The IBM body count ran about 200,000 out of 400,000. Everyone seemed lost, confused and scared. We took off our blue suits and white shirts and started dressing like the guys at Apple Computers. We had a new CEO from outside the ranks of IBM. The press never let up.

Sun has the ability to go through their restructuring in a more graceful manner than IBM. Sun's CEO and new executive team do not follow the slash and burn techniques of other companies. They put their customers first. They continue to have a professional sales organization. Sun will educate themselves and make a come back. They are not stretched too thin.

Something else might help Linux advocates get a sense of Sun Microsystems. They are performing the largest Linux desktop rollout in US history. That's correct, Sun Microsystems is rolling out Linux internally. They are their own customer.

Their experience adds to the Linux knowledge base everyday. So, if you think Sun wants to kill Linux tell it to the employees with dozens of different brands of laptops using WiFi cards and numerous pieces of Intel based hardware at Sun Microsystems.

Also, in case you haven't heard, Sun hired system integrator EDS to perform the Sun internal rollout. Sun calls their rollout the "Sun on Sun" initiative. The desktop is the Linux Java Desktop System.

Where's the beef?

Sun's beef with Red Hat resembles my beef with fire ants. Those little red ants sting and create large welts. When Sun attempted to work with Red Hat to create a desktop, Red Hat reportedly negotiated in a manner unbecoming their own size and capacity. Only the people who attended those negotiations will ever know what really happened. Those who have worked with Sun in the past recognize Sun's professionalism. Those who have worked with Red Hat know to expect a tough time.

Now, add Oracle and Dell to the mix and you will find additional insult and injury as far as Sun is concerned. Oracle once regarded Sun as one of their preferred platforms for their database. Oracle changed business models and moved to Linux. To carry the analogy further, the Oracle-Dell-Red Hat partnership might feel like a cluster of red ant stings on your right foot.

Sun looks at Red Hat and sees a company that needs mentoring. Instead of working with Sun, Red Hat thought they could knock off the 800 pound guerilla. So they tried. I can just imagine the thoughts that might go through the head of an executive at Sun when he reads about Red Hat buying the last of the old Netscape assets. Do you think anyone considered it a waste of $20 million? Perhaps Red Hat thinks they'll use those Netscape assets to compete with Sun's ONE solutions. When someone is self diluted, it's difficult to know what they think.

Red Hat made a mistake going after Sun. Now, Sun can begin talking about how Red Hat's lawyers use trademarks the way Microsoft uses patents and copyrights. As some of us know, Red Hat has an aggressive legal department when it comes to copyrights and trademarks. Red Hat's attitude hasn't been that gracious to people looking for help in the open source community. Some of this may come back to haunt them.

Working Pursuits

Now, forget everything you just read. When it comes to capturing business, sales and delivery people do not want to bothered with press releases and articles by George Colony. Someone just presented me a Request for Proposal. It requires Red Hat Linux running on Sun AMD servers. It also calls for a price quote on installing the solution in 53 locations.

I need a pursuit team, a project manager, professional service technicians, trainers, delivery managers, customer relations reps and a price. The customer wants to pay for a pilot. They want the pilot to last six weeks and meet five goals. That's their criteria for success. We know we can win the business and we need the six weeks to organize for the project.

Do you think that any of the people charged with delivery care what executives say to the press? We do care about getting the job done. In this case, I can count on Sun to deliver the solution and provide managers and technicians. What can I count on from Red Hat?

This is where Linux advocates need to get a grip. Linux loses business everyday because we lack the resources to deliver. When companies perform due diligence, they find unsatisfied customers. If you believe that IBM Global Services, HP and Novell are delivering enterprise solutions in step with demand -- think again. If you believe any Linux company is delivering desktop solutions in step with real demand -- think again. The business that Linux does win falls in our laps.

Likely scenarios

I don't know if I have earned the right to speculate like George Colony, but at least you will know that I am speculating. I have a theory based on a few years of work experience in investment banking as to the likely outcomes. I haven't worked as an investment advisor in over ten years, so don't take any of this as advice. I'm not licensed, seek your own advisor if you plan on using this information to make investment decisions. I'm a journalist, in this scenario. Here's my journalistic analysis of the situation.

Sun's new AMD strategy should work. In fact, I believe it is working. The employees will settle down after the reorganization and they will begin to grab market share from IBM, Dell and HP. They have found good outsourcing partners. People will turn to Sun and EDS to fulfill their enterprise needs. Sun will win the web services war and become the preferred platform for things like HDTV backbone deployments.

Red Hat will cease being seen as the only real Linux vendor. Red Hat will mature and begin growing consistently will their capacity to perform. They will need new business strategies and better community relations to make progress. They will struggle if they attempt to continue going after Sun customers. Red Hat is a niche player and they need to find more niches.

Red Hat may not be an attractive acquisition candidate until they accumulate more tangible assets. They have cash, but it came from a bond sell - in others words, debt. They are vulnerable to Microsoft's "Get the Facts" campaign because of the "Total Cost of Ownership" issue. Red Hat's book value and revenue streams do not justify the image Red Hat executives convey to themselves and the market.

Red Hat will discover that it takes more to compete with Novell and Sun than telling people to fax them a purchase order. Today, Red Hat has dubious allies in HP and Dell since those companies rely on Microsoft for their core competencies. If the people at Red Hat want out of the corner in which they have painted themselves, they need better friends. I won't speculate as to their ability to reconstruct bridges burned.