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  • Red Hat Buys JBoss–Your Move, Novell

    April 17, 2006 Timothy Prickett Morgan

    There have been rumors since early this year that open source and commercial Java middleware distributor JBoss was in play, and that software giant Oracle was pursuing the company as well as Zend Technologies, which distributes a popular open source alternative to Java called PHP. JBoss was definitely in play, but the company has agreed to be acquired by commercial Linux distributor Red Hat for $350 million rather than Oracle, which oddly enough puts Novell in a funny position.

    Under the acquisition deal, Red Hat is giving JBoss, which is a privately held company that is headquartered in Atlanta, Georgia, approximately $210 million in Red Hat stock and $140 million in cash. JBoss will be run as an independent subsidiary of Red Hat, and Marc Fleury, JBoss’ CEO, will report directly to Matthew Szulik, Red Hat’s chairman and CEO. If the JBoss subsidiary meets certain future customer sales targets (which Red Hat would not detail in its conference call with Wall Street analysts), its owners will be able to secure another $70 million. Red Hat says that it expects to close the JBoss deal by the end of May, which is the end of its first fiscal quarter. JBoss, being a privately held company, cannot be taken over in a hostile manner, but it is just remotely possible that Oracle, Novell, or another interested party such as IBM or Hewlett-Packard could sweep in with a much larger bag of cash and steal away JBoss from Red Hat.

    After the rumors that Oracle was trying to acquire JBoss surfaced in early February, the company’s representatives played down the rumors and said that it was far more likely that JBoss would stay neutral, play all the platform providers, grow organically, and then take itself public. But, within the past few months, something clearly changed. For one thing, Red Hat seems to have come to the conclusion that its Red Hat Application Server, which is based on competing open source middleware technologies, was not giving it the edge it needed to move up the open source software stack and that JBoss has become the de facto Java application server in the world, so it had better get ahold of it before someone else–like Novell or IBM–does.

    Red Hat Application Server, which costs $999 a year to license, is heavily based on technologies developed by the Apache Software Foundation and the ObjectWeb Consortium. The former is best known for its eponymous open source Web server, which is by far the most deployed Web server on the Internet, as well as the Tomcat Java Server Pages extensions to Apache. (Jakarta was the name of the project that developed the Tomcat server.) The latter organization was formed in 2002 by French server maker Bull, telecommunications giant France Telecom, and Institut National de Recherche en Informatique et en Automatique, the French national institute for research in computer science, and its Java Open Application Server (JOnAS) is starting to get traction in the market. ObjectWeb is a Java 2 Enterprise Edition licensee, and the JOnAS and Tomcat servers are the core of the product, with JOnAS handling Enterprise JavaBeans and Tomcat handling JSPs and servlets. ObjectWeb has also developed JORAM, which is an open source alternative to IBM’s WebSphere MQ and Microsoft‘s MQM middleware; Enhydra, which is a Java/XML server; and JOTM, a distributed transaction manager. Red Hat Application Server also implements the SOAP protocol developed by Apache under the AXIS project, and makes use of the JakartaServer Management Extensions (JMX) system management features developed for Tomcat to control both JOnAS and Tomcat. The application server also offers clustering across Linux nodes for failover and load balancing, which is based on Red Hat Cluster Suite.

    In the call last week, Red Hat’s Szulik downplayed the idea that the JBoss deal would somehow derail the company’s efforts with the Red Hat Application Server or the ObjectWeb Consortium, but this is the kind of thing you expect the top brass to say. “We have made a significant contribution to JOnAS, and I expect it to continue,” said Szulik. But when pressed for how JBoss and Red Hat Application Server might be reconciled, neither he nor Fleury would answer the question and the investor relations person handling the call quickly moved on to the next question. What can be honestly said is that Red Hat tried to take on JBoss with JOnAS and other technologies at exactly the same time in late 2004 when JBoss became the first J2EE-compliant open source Web application server, and JBoss simply had a lot more momentum. The JBoss application server has quickly surpassed IBM’s WebSphere and BEA Systems‘s WebLogic in terms of installs, based on various polls, and the ObjectWeb stack was way down in the stats.

    So why Red Hat wanted to acquire JBoss is obvious. Why JBoss chose Red Hat is a little less obvious, but Fleury said that he discussed the company’s options with key developers, sales people, and managers at JBoss, and they all agreed that this was the best option. (Still, Szulik said that key JBoss employees do have lock-ins on their stock that will keep them at Red Hat, just in case, but he added that he did not think these were necessary. Funny how they were implemented anyway. . . . ) JBoss apparently did not have the patience to expand its business through partners like Red Hat, Novell, IBM, HP, and others and grow its channels worldwide so it could go public–just like virtualization software maker VMware didn’t at the end of 2003 when it sold itself to disk array maker EMC for $625 million rather than go public. In both cases, the acquisition deals were arguably better than a public float would have been, and both companies ended up a part of a larger, more secure company as well as making a ton of money for their owners without having to go through a messy initial public offering.

    “We chose Red Hat because we thought this was a great option for JBoss,” explained Fleury. “We are very excited about the opportunities ahead of us. We aim to be the largest, independent pure-play software provider.” Fleury and Szulik explained that one of the problems that JBoss had was expanding beyond its core markets in the United States and Europe, something Red Hat was facing a few years ago after it went public. Last week, Red Hat has 17 offices servicing 31 countries, as well as partnerships with major server makers that gets it into other key markets, and this will help JBoss move into other areas where it did not yet have traction, such as in the Asia/Pacific market. The deal puts JBoss in these markets almost immediately, instead of taking years building up offices and local presences in dozens of key countries.

    The next obvious move for Red Hat is to close the middleware stack and add an open source database, something Red Hat attempted to do in October 2002 with a commercialized version of PostgreSQL called Red Hat Database 2.0. I talked to Brian Stevens, Red Hat’s chief technology officer, last week at LinuxWorld about Red Hat’s probability of putting out a database, and he kinda dodged the question, and hinting that Red Hat would take the tack of supporting multiple open source databases. And Szulik was not in any mood to answer the database question on the conference call last week, either. “We want to get these two companies integrated. It would be very premature to answer that question.”

    Novell has been increasingly relying on JBoss as its middleware stack, and it will be interesting to see how the acquisition by Red Hat shifts its own middleware alliances. When asked about Novell, Szulik gave the expected canned response. “We look forward to having Novell be a productive partner.” And, to a lesser extent, JBoss’ partnership with Microsoft for the Windows platform is also called into question. Microsoft was probably willing to concede that JBoss was popular and an alternative to its own Windows Server System middleware stack for Windows, so long as JBoss remained an independent player. But now, supporting JBoss means helping a rival platform provider and the dominant Linux supplier to enterprises. I think Novell and Microsoft will both be looking at other open source middleware stacks to champion, and ObjectWeb is the obvious first one to turn to.

    JBoss has about 100 employees in the United States and another 50 in Europe, and many of its key employees are paid by JBoss to contribute to over 30 open source development projects. These projects eventually feed back into the JBoss application suite, which is now called the JBoss Enterprise Middleware System (JEMS).

    RELATED STORIES

    Rumors Say Oracle Is Trying to Buy JBoss, Zend, and Sleepycat

    HP, JBoss Partner on JEMS Middleware Stack for Linux, Unix, and Windows

    Novell, HP to Sell Preconfigured Linux-JBoss-Oracle Servers

    Red Hat Packages Up Open Source Application Server

    JBoss 4.0 Gets J2EE Support, Takes on IBM, BEA, and Others

    HP Offers Services to Support MySQL, JBoss

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    Tags: Tags: mtfh_rc, Volume 15, Number 16 -- April 17, 2006

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TFH Volume: 15 Issue: 16

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    Table of Contents

    • Oracle Puts Out FAQ File on Its iSeries Plans
    • Branch Office Managers Nervous About Data Security
    • New IBM Deal Gives Decent Trade-In Rebates on Old Gear
    • Raz-Lee Security, Advantage International Announce iSeries Partnership
    • Next Up on the System i: Python
    • RAID Buys Assets of Zzyzx–Formerly eStorage, Formerly BCC Technologies
    • Red Hat Buys JBoss–Your Move, Novell
    • CA Buys Cybermation to Bolster System Management Software
    • Mad Dog 21/21: Patent Lather
    • Job Posting Areas Created on the IT Jungle Forums

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