In a recent CNET interview with Microsoft CEO Steve Ballmer, Ballmer calls out two "primary forces" for Microsoft in the enterprise: Oracle and Linux. These are the things that keep Microsoft's Ballmer up at night.
It's odd, then, that neither Red Hat nor Novell seem to be doing much to take Microsoft on directly, except in the Unix-to-Linux competition with Windows that either Red Hat or Microsoft is winning, depending on whom you ask.
Historically, Red Hat has simply lacked the resources to go after Microsoft. Red Hat has always run a very lean operation, a necessity now but especially back when its subscription model hadn't yet started to deliver recognizable revenue that it could actually spend. Those days are over, and Red Hat now throws off a lot of profit.
Yet Red Hat still seems content to tangle with Microsoft at the field level with a "Linux is better than Windows if you're leaving Unix," while in the CNET interview Ballmer outlines a much more robust competitive strategy against Linux:
(Our EMC) partnership makes us stronger versus our Linux-based alternatives on the desktop. Part of the way we compete with open source desktop stuff is by having stronger total value-add.
We can't beat Linux on initial price. So, the notion of being able to go and say, here's a solution that you can really use to do fantastic security, fantastic data loss prevention from the client through the back-end, that's a powerful part of our proposition.
This refers to desktop Linux, but Microsoft's strategy everywhere against Linux is the same: a broad, value-adding ecosystem enabling Microsoft to offer holistic solutions. Red Hat largely continues to deliver point solutions ("Need an application server? We've got the best one. Need an operating system? Ours is best"), missing the market for overarching solutions, a market that Microsoft has mastered.
Going forward, I believe that Red Hat must expand its solution offerings if it wants to take market share from Microsoft. The Unix-to-Linux "low hanging fruit" won't last forever. When it's gone, the biggest barrier to Red Hat's continued growth will be Microsoft. Unless Red Hat starts acting now to build up a holistic response to Microsoft's value proposition, including the desktop, Red Hat will eventually struggle to grow.
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