Red Hat Dilemma: Cloud Players Balk At New Support Fees

Enterprise Linux leader Red Hat is changing its support pricing model in a way that opens the door to rival operating systems — at least in the cloud service provider market — and perhaps more broadly. One large cloud provider said the move will more than double his costs, making the Red Hat Enterprise Linux (RHEL) option as pricey as Windows.
 
Pricing — specifically how much to charge for supporting open source software — is a big issue for Red Hat in this webscale era where many companies demand free or near-free operating system options. It doesn’t matter much to them if the check they’re writing is for software licenses or enterprise support, they don’t want to write it, and increasingly feel they don’t have to when there are legitimate, extremely inexpensive options — including CentOS which is a free, unsupported version of Red Hat Linux.
 
Why buy support on a free OS?
 
Why buy Red Hat support when you have a talented engineer who can support CentOS in house? The question for Red Hat, then, is how to please (and keep customers) in the cloud and webscale markets. And the question for other companies that resell support for open source software, is could Red Hat’s struggles to convince webscale and cloud vendors to pay, eventually affect me?
 
At issue here is the way Red Hat has restructured what it charges service providers for support which, in my sources’ case, means paying per socket as opposed to per server, according to an executive with this provider. Existing customers can continue on their current plan for a year, but all new customers that come in above the current service provider license agreement, will be charged the new rate immediately. A second large cloud service provider confirmed the pricing changes.
 
The unnamed source’s options are to subsidize Red Hat Enterprise Linux for customers — which his company has been doing — or pass the price increase on to customers, which, he said will drive more of them to use CentOS, Ubuntu, or even Windows which he said is now price competitive.