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What Happened to Red Hat Exchange?
Selling Open Source
February 5, 2010
Three years ago Red Hat launched an effort to sell partners open source solutions -- it didn't work out as well as they had originally planned, proof that an open source app store doesn't actually work.
An open source app store from a Linux vendor is a good idea, right?
As it turns out, Linux vendors selling their open source partners solutions directly isn't always a recipe for success. Just ask Red Hat, or its rival Novell.
In 2007, Red Hat launched an effort called the Red Hat Exchange (RHX), a marketplace for selling open source solutions from Red Hat's partners. RHX was in part Red Hat's response to competitive pressure from the Novell Market Start program.
Now in 2010, neither of those sales programs is still operational.
"When we came out with RHX we were hoping for more ambitious adoption but we've learned that selling third-party applications via a marketplace is challenging," Mike Evans, Red Hat's vice president of corporate development, told InternetNews.com."When you've got marketplaces that offer buyers the choice of buying in the marketplace or directly from the vendor themselves, which is what our marketplace was, there isn't a real efficient marketplace."
Evans noted that Red Hat put the Exchange out and quickly found out that the ISV partners were getting the biggest value from the visibility they got from being on the site. He added that ISV partners appreciated the publicity aspect of the program, and the lead-generation aspects that followed.
"As we were working through [RHX], we started working with SYNNEX and the Open Source Channel Alliance and it became clear in talking to ISV partners [that] what they wanted was visibility into our user base and sales channel," Evans said.
The Open Source Channel Alliance launched in April 2009 as an effort to make it easier for VARs to distribute and support open source software. In August 2009, Red Hat expanded its channel efforts, adding a new premier partner level as well as specialization programs for virtualization, JBoss middleware and Red Hat Enterprise Linux infrastructure technologies.
"So we decided to change our approach and have those people be the core in the open source channel alliance, and that has been more valuable to them than the Red Hat Exchange ever was," Evans said. "So we're going to keep going down that path to help open source ISV partners get aligned with our selling channels."
Evans added that Red Hat's channel effort through VARs and system integrators is now growing nicely, and that's why Red Hat Exchange is no more.
"We no longer believe that it is productive for Red Hat to try and front end the sale of third-party open source products," Evans said. "It's more effective for them to line up in sales channels with our partners."
In Evans' view, enterprises that are going to buy an open source application at scale will want to buy it from its source.
"If I'm going to buy a thousand Alfresco content management servers, what value is Red Hat as the front-end guy there?" Evans said. "I'm going to want to have that Alfresco throat to choke."
Red Hat's experience trying to grow an open source solutions marketplace is not unique. Rival Novell has a somewhat similar effort called Market Start, though Novell says that effort was intended to be more channel-friendly from the outset. As is the case with Red Hat Exchange, however, Novell Market Start no longer exists.
"Our Market Start program ended when Novell enhanced its worldwide channel program in 2009," Novell Vice President Scott Lewis told InternetNews.com. "The Novell PartnerNet Program now offers a variety of enablement materials online, which are constantly updated. Our focus is on bringing ISVs, VARs, solution providers and integrators together in the market both through our own partner program and through focused programs with value-added distributors."