Expanding on a plan it announced in November 2007 by which Red Hat (RHT) said it would capture 50% of the operating system market by 2015, the company announced on February 13 that it intends to also capture â€œ50% of enterprise middleware workloads by 2015.â€ The goal comes as an interesting juxtaposition with the Alfresco Barometer Survey announced February 12 at the JBoss user conference. That survey indicated that JBoss was not even the most popular open source application server. If the latter is true Red Hat will have a tough row to hoe.
Letâ€™s start with how Red Hat is defining middleware. The answer is very broadly (â€œmore than just the application server aloneâ€). To accomplish this goal using Red Hat’s broad definition of middleware, Red Hat would have to not only displace other potentially more popular open source middleware (e.g., Apache HTTP software) but billions of dollars of â€œclosed-sourceâ€ software currently in use across the world between now and then. (NOTE: The open-source vs. closed-source characterization is not meaningful in understanding or measuring the market as spelled out earlier in this blog post but the open source devotees still insist on drawing this distinction.)
To literally accomplish its goal, Red Hat would need to displace 50% of the $20-$30 billion worth of IBM (IBM) CICS and BEA (BEAS) TUXEDO shipped in the last 30 years, the $20–30 billion worth of MQ Series, TIBCO (TIBX), etc., shipped in the last 20 years, the $20-$30 billion worth of WebLogic, WebSphere and Oracle (ORCL) Application Server shipped in the last 15 years, the $10-$20 billion of BEA, IBM and so forth integration servers, development tools, ESBs, portals, and so forth. Add business intelligence software (if you use Oracleâ€™s definition of middleware) and collaboration software (if you use IBMâ€™s). Sorry but the aircraft carrier just does not turn that quickly.
As for how Red Hat is defining â€œ50%,â€ the company says it means of that yearâ€™s â€œdeployments of middleware technology.â€ Hopefully us reserachers will have some license-agnostic census software to measure that number by 2015 but to get there, do the math. No matter how you measure 50%, Red Hat would have to displace existing installed software at an astonishingly rapid rate over the next 6 years to reach its goal because the overall software market is only growing 5–6% (and the middleware market basically tracks the overall software market).
At the press conference announcing its intention, Red Hat said that its subscription model makes comparison with other middleware suppliers impossible. That is not accurate and part of the litany of open source movement claims that can be misleading to investors. Most of the current installed base of middleware has subscription maintenance revenue associated with it just like Red Hatâ€™s.
In fact, at the press conference Red Hat showed an IDC estimate of $15 billion of middleware revenue in 2011; about 66% of that number represents subscription maintenance just like Red Hatâ€™s (the other 33% in any given year represents license revenue for totally new business and add-ons/upgrades to the installed base). The equivalent IDC number for 2008 is probably in the $11 billion range, of which Red Hat’s total is less than $50 million.
(I am just guessing. The only access I have to IDC middleware market share data is via its press releases. On the other hand, it is a very educated guess since I popluated that database for many years and still do IDC backcasting and operating environment splits in my sleep.)
– Dennis Byron