Open source software companies are in a strange business: they don't usually own exclusive rights to publish the open source software they sell, and many have little or nothing to do with the development of much of the software they sell. Also, by definition, anyone can download their product – open source software – for free. So how does a company like Red Hat win new customers when anyone, including their potential customers and competitors, can get the source code to Red Hat's flagship product, Red Hat Enterprise Linux (RHEL)? And why is that an advantage, not a problem?

Enterprise OS or Commercial Linux?

Red Hat, Inc., publishes and sells RHEL, an operating system suitable for use as an enterprise OS; versions of RHEL can be used on desktops or servers. RHEL, like any Linux distribution, is based on the Linux kernel and uses a multitude of other software to perform all OS functions, as well as numerous application software packages. All are published under open source licenses. To comply with those licenses, Red Hat must do several things: make the source code to the software freely available, permit their customers to redistribute that source code, and allow them to modify and distribute those programs under a compatible license (that is, an open source license).

Red Hat sells RHEL by subscription: the annual fee is up to $299 per workstation, and up to $2,499 per server. If that seems a high price to pay for “free” software, remember that Red Hat sells much more than just the software:

• Installation media may be provided in the form of CDs/DVDs, or you may opt instead to download ISO images and burn your own installation and documentation media.
• The more you pay, the more support you get. At the highest level, you get 24x7 phone or Web-based support with one-hour response time; one-day response Web-only support costs much less.
• You receive software upgrades as they are made available.
• Red Hat certifies RHEL for hardware platforms from leading vendors.

Most important to enterprise customers, Red Hat provides consistency and stability in the form of a long and predictable product cycle. They guarantee continued support for each of their releases for a full seven years, so you're not subjected to unexpected or forced upgrade cycles.

Because Red Hat must publish the source code to their distributions, anyone can (theoretically) download those sources and install RHEL for free. In practice, it is not quite that easy: unlike most other Linux publishers (commercial or not-for-profit), Red Hat does not publish ISO images of installation media. So while you can download and burn your own set of CDs to install other Linux distributions, you must go through more trouble to install RHEL without paying Red Hat.

While Red Hat must abide by the licenses of the software they incorporate into RHEL by publishing source code, they are not obliged to make it easy for others to re-create or try their flagship product at no charge. In this they are very different from other vendors selling Linux commercially. For example, SUSE publishes burnable installation ISOs for free and evaluation distributions. Mandriva waits for a few weeks after releasing new versions before it publishes them online. Xandros Desktop Linux is also available online for free but as a limited Open Circulation Edition for personal use only.

If Red Hat is a Linux vendor, its behavior is considerably different from that of other Linux vendors. In fact, the most significant word in the product name “Red Hat Enterprise Linux” is “Enterprise” rather than “Linux”. Red Hat isn't really competing against SUSE or Mandriva, but rather against Microsoft, Sun, IBM and other enterprise software vendors.

Red Hat Freebies and Clones

Red Hat does do a great deal for the open source software community, and they give away some of the software they've developed in different forms. The RHEL distribution is not no-cost, but Red Hat sponsors an alternate distribution called Fedora Core. While the RHEL distribution is updated more cautiously and supported longer, as is appropriate for enterprise software, Fedora Core distribution updates are published much more frequently and become obsolete more quickly. Fedora Core serves as a beta program/test bed of sorts for Red Hat. Its stated goal is to incorporate newer, cutting-edge technologies that haven't yet been deemed stable for the enterprise.

But let's go back to Red Hat's enterprise OS. If you know all the pieces that go into RHEL and if you can download all the source code, what stops you from compiling them and creating a clone of RHEL? You'd have a functionally identical Linux distribution, but you would have paid nothing to Red Hat.

The only barriers to RHEL cloning are the tasks of downloading and compiling the source code into an installable form. Cloners must also strip out all of Red Hat's proprietary content – logos and other copyrighted references to the company itself – as well as any non-open or proprietary software that Red Hat includes with their distributions.

Thus, if you want the functional equivalent of RHEL without paying for the installation media – and, of course, without access to any of Red Hat's support services – you can get it at little or no cost from one of several RHEL-cloning projects, including:

• CentOS: A free project, CentOS (for “Community ENTerprise OS”) is the best known and most popular of the RHEL cloners, and their goal is to provide a Linux distribution that is as much like RHEL as possible. They track RHEL releases closely, and their stated goal is to publish fixes within 72 hours of the time Red Hat releases them; fully installable updates may take as much as two weeks to build and test. Although CentOS makes their version available at no charge, they do accept contributions to help pay their costs. After having been warned by Red Hat's legal team, CentOS is scrupulous about removing all proprietary artwork and branding from their distributions, and they refer to Red Hat as “a prominent North American Enterprise Linux vendor.”
• Scientific Linux: Scientific Linux originated at universities and research labs such as CERN and Fermilab, with the goal of being fully compatible with RHEL and clones while allowing some flexibility. Unlike CentOS, Scientific Linux incorporates some slight modifications into the RHEL source; they also support further customization using “sites” to create distributions to meet the needs of a particular facility. SL's “primary purpose is to reduce duplicated effort of the labs, and to have a common install base for the various experimenters.” Like CentOS, Scientific Linux is free to use or download.
• Lineox Enterprise Linux: Lineox, Inc. is a Finnish company that sells installation media with their own distribution (based, of course, on the sources published by Red Hat). The media is sold for a nominal fee, though Lineox also offers support services.
• Tao Linux: Another free project, Tao Linux is based on RHEL but also offers a LiveCD (bootable CD ROM) version that does not require installation or any modification to the systems on which it runs.
• White Box Enterprise Linux: Like CentOS, the goal for this project is “to be 100% binary compatible with RHEL.” WBEL was initially “sponsored by the Beauregard Parish Public Library in DeRidder, LA, when Red Hat changed their orientation from Linux vendor to enterprise OS vendor. With several servers and more than fifty workstations running Red Hat Linux, the library would have had to do a costly migration to another Linux distribution, or else start paying Red Hat's new subscription fees. With limited resources, the library opted instead to create their own RHEL clone and do without Red Hat support.

Why Red Hat Doesn't Mind

Traditionally, publishers of software (and other kinds of content) have treated people who use their product without paying for it as copyright infringers – criminals. Red Hat can afford to be complacent about the RHEL clone projects for a number of reasons. Most importantly, Red Hat has no choice: they are obligated by the terms of the licenses of the software they package. Red Hat even acknowledges that some of those who try out an RHEL clone distribution will eventually decide to become paying customers. The clones help Red Hat in other ways:

• Students, as well as professionals looking to expand their skill set, can try or tinker with an RHEL clone and gain valuable experience without having to pay Red Hat's subscription fees. This helps assure the widest possible distribution of their OS to those who would never buy it, thereby increasing the population of skilled users and system administrators. The more people with RHEL skills, the better Red Hat's market penetration.
• Individuals whose companies are using RHEL can run a compatible OS on their home systems without the expense of an annual subscription.
• People who are sufficiently motivated to install enterprise quality software on their private systems are just the kind of people who are most likely to detect, and in some cases fix, bugs and security vulnerabilities. When those bugs and fixes reach the RHEL project, they result in an improved product for Red Hat.
• Even if the RHEL clones replicate the actual software, Red Hat offers significant added value in the form of support and immediate access to all patches. Clones offer an easy and low cost way for IT professionals to audition RHEL for their applications; if the clone provides a suitable solution, the result may very well be a new subscriber for Red Hat.

Can Red Hat, a company that provides little more than open source software bundling services plus support, really compete with proprietary software vendors who have the option of taking Red Hat's own flagship product and selling the same type of package themselves? Earlier this year, Larry Ellison shook the Linux world with casual talk about Oracle selling their own Linux distribution.

Oracle could easily reproduce the RHEL product, as CentOS and others do, and bundle their own proprietary as well as open source product lines with support. In fact, it offers an even better value proposition – but only if Oracle is able to deliver support and other value-adds to make it worthwhile to their customers. While cloning RHEL and rebranding it as “Oracle Linux” may be the cheapest way to go, a friendly cooperation between Oracle and Red Hat could result in the first credible competition that Microsoft has faced in many years.

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