Red Hat's next Linux due before March

Red Hat plans to ship the next version of its premium Linux product on February 28, debuting major virtualisation technology but missing an earlier deadline by about two months.

Red Hat Enterprise Linux 5 had been scheduled to ship by the end of 2006. However, the company began giving itself scheduling wiggle room in September, when Red Hat released the first RHEL 5 beta. A second beta arrived in November.

Now Red Hat is being more definitive. "I'm sure we will ship a gold (version) on February 28," Chief Executive Matthew Szulik, referring to the final version, said in an interview after the company reported its quarterly financial results.

The delay isn't a major problem for Red Hat, said Pund-IT analyst Charles King.

"Making certain that RHEL 5 is thoroughly locked, loaded and debugged before sending it out the door (is) more important in the end than meeting a deadline," he said. And because Red Hat sells software subscriptions, all existing customers get free upgrades, so the company doesn't consider the new version a "revenue event," he added.

One major feature arriving in RHEL 5 is Xen, virtualisation software that lets a single computer run multiple operating systems simultaneously. The technology's initial advantage is to let administrators load up a server more efficiently, but virtualisation in the longer run also holds promise for reliability and flexibility because virtual machines can be moved from one computer to another while running.

Virtualisation has been a feature on higher-end servers for years and has arrived on mainstream x86 machines chiefly through software from EMC's VMware subsidiary. Xen lacks VMware's market power, but the open-source software is being incorporated as a standard feature of corporate versions of Linux and the x86 version of Sun Microsystems' Solaris.

Microsoft is working on another virtualisation competitor, code-named Viridian. It's due to ship within 180 days of "Longhorn Server," the server cousin to Windows Vista.

Reworking an operating system's foundation, as "hypervisors" such as Xen require, is necessarily complicated, however, and Red Hat Chief Technology Officer Brian Stevens said maturing and incorporating Xen is the major factor on which RHEL 5 depends.

RHEL 5 is based on version 2.6.18 of the Linux kernel -- the core of the operating system -- compared to 2.6.9 for the current RHEL 4. The software includes new security features to protect against some attacks, plus a "technology preview" of Red Hat's Stateless Linux software to let desktop machines pull data and settings from central servers.

Red Hat's chief competitor, Novell, began shipping Xen in its Suse Linux Enterprise Server months ago, but so far, the company hasn't threatened Red Hat's commercial Linux dominance. A newer threat -- Oracle, which announced in October that it will release a free RHEL clone and sell its own support for the software -- so far hasn't been a problem.

"Clearly, the doomsday scenario that some investors feared regarding the entrance of Oracle into the enterprise Linux arena and the ramifications of the Novell-Microsoft partnership did not materialise in the quarter," W.R. Hambrecht analyst Robert Stimson said in a note last week.

Red Hat's billings increased 50 percent, compared with the year-earlier quarter, to US$133 million, well above analysts' average expectations of US$120 million to US$125 million, Stimson said.

One challenge Red Hat faces is integration of JBoss, open-source software from a company of the same name that Red Hat acquired in June. Red Hat reiterated earlier guidance that JBoss would produce US$22 million to US$27 million in revenue by the end of February, prompting Merrill Lynch analyst Kash Rangan to say in a note that JBoss is "tracking well."

Among Red Hat sales worth at least US$1 million in the quarter, two-thirds involved JBoss software, Szulik said. "When we acquired (JBoss, it) was an unprofitable venture. It is still unprofitable, but it's improving," he said.

Red Hat expanded JBoss sales into Asia, Latin America and the Middle East, and the acquisition presents an opportunity to boost revenue from subscription renewals, he said.