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Red Hat open source app exchange is advantage, not competitor, VARs say

The portal Red Hat set up to sell third-party business applications will help VARs put together open-source solutions, not steal support contracts through direct online sales.

At first glance, Red Hat Exchange looks like it could be a threat to systems integrators (SIs) and resellers who currently work with any of the 14 open source software (OSS) vendors currently included in it.

RHX is a Web portal that officially opened last week to let users browse a variety of business applications from independent software vendors, see otheras' comments about the applications, download them for free trials and purchase them.

Each purchase comes with a standardized contract for Red Hat Enterprise Linux (RHEL) 5 subscription, and Red Hat support for both RHEL and the third-party application.

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The obvious implication is that customers who buy directly through RHX would be spending money that might otherwise go to the value-added resellers (VARs) with which they usually work.

But open source SIs and VARs said that, far from competing with channel companies for support contracts, RHX will help the channel manage basic software updates and focus on customization and integration services.

"When you assemble solutions -- and it could be five or ten different open source packages as part of an assembly -- one of the challenges is, how do you maintain that, given all of the different release cycles with all the different packages," said Marc Osofsky, vice president of marketing at Optaros Inc., a Boston-based SI that specializes in OSS.

RHX simplifies that, he said, by giving SIs a single point of contact for contract and support escalations, and letting SIs update software through yum (yellowdog updater, modified) -- a command-line updating tool for Red Hat.

Optaros bundles together and integrates several applications to meet each customer's needs, Osofsky said, including several available on RHX.

Backing from a major Linux distributor could also help SIs pitch software featured on RHX to companies who still question whether OSS is viable higher up in the application stack, said Salim Lakhani, CEO of Initsoft LLC, a Cupertino, Calif.-based consulting firm whose products include Centric CRM, which is on the RHX.

In fact, the RHX isn't even a new concept, Lakhani said. Another company, SpikeSource Inc. in Redwood City, Calif., already provides a Web portal and easy distribution tools to help users find and install OSS applications. Initsoft already works with SpikeSource, Lakhani said, and he said he's "very pleased" that Red Hat is now throwing its weight behind the idea.

"I think there's so many options available in open source, it's hard for people to filter out all the good stuff. And if somebody is actually evaluating all the different [OSS] companies and filtering out good, supported open source software, then this will actually be good for the consumers," he said. "Whatever helps my customers, helps me."

Most of Initsoft's revenue comes from customization and deployment consulting, Lakhani said, so he is only too happy to let Red Hat pick up the support contract.

"We're quite early on in the enterprise adoption of open source software, especially as you move up the stack," Osofsky said. "The Red Hat Exchange is a great step in that direction. And I know a lot of people are trying to write a story about how it's infringing on existing players, and the realty is, none of that really exists."

RHX shares some qualities with's AppExchange site, the company's Web portal where users can buy third-party extensions to's software as a service (SaaS) CRM, said IDC analyst Stephen Graham. The idea behind both sites, he said, is to establish a "single marketplace for customers" to find software that runs on a vendor's platform --'s Apex platform in AppExchange's case, and RHEL with Red Hat.

It's all well and good for Red Hat to try to solidify and further legitimize OSS, Graham said, but the question going forward is whether it -- or any other company -- can bring together applications from the open source and proprietary worlds.

Most CIOs work with a mix of open source and proprietary products, he said, and their main concern is getting all of those pieces -- regardless of the license behind them -- to work together as seamlessly as possible.

"The realty of the situation is, a lot of these CIOs, they don't need alliances which are only focused on open source," he said.

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