Community Open Source vs Commercial Open Source in the Cloud: Will CentOS beat RHEL?

Pricing and licensing models of commercial open source in the cloud is driving enterprises to community open source

There has been a lot of debate about the role open source will play in the cloud.  Many of the debates are focused on open standards.

Another big issue is licensing and pricing of open source in the cloud.

In the last few weeks I've talked with several customers who are using CentOS in a public cloud.  These companies are Red Hat Enterprise Linux (RHEL) customers, but they chose CentOS for the cloud because of the lack of RHEL offerings with an affordable cloud licensing model.  These enterprises are choosing community open source over commercial open source for their application infrastructure in the cloud.

I don't think this problem is limited to RHEL.

Another large enterprise recently told me they were expecting to use more open source for their application infrastructure in virtualized and cloud environments, because of the pricing models of proprietary solutions.  However, many commercial open source vendors have licensing models that are not all that different (albeit less expensive) than those of proprietary vendors. 

Enterprises definitely see benefits of using open source in these cloud environments. They are worried that the auto-scaling capabilities of cloud environments could overwhelm them with excessive software costs from proprietary software, so open source solutions look like an attractive alternative.

Unfortunately, many open source vendors are not providing pricing models for the cloud that address the problems customers are having with proprietary solutions.  Perhaps in their desire to preserve existing revenue streams, they act too cautiously, pushing customers toward community open source offerings.

Red Hat, for example, currently offers several RHEL solutions in the cloud . One solution enables customers to run RHEL in the cloud on a single virtual instance with a lot of caveats. Another solution is an hourly model that is currently only available as a beta offering.  While these are certainly just initial steps in Red Hat's move toward licensing in the cloud, it's not clear if they will be as aggressive as they need to be to become the dominant player in Linux for the cloud.

Although we are still learning how customers will want to buy open source offerings for the cloud, open source vendors will need to address these customer concerns about pricing. By playing it safe to protect margins, they may inadvertently push enterprises toward community open source.

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