What Happened to Red Hat Exchange?
Selling Open Source

Sean Michael Kerner
Friday, February 5, 2010 06:20:21 PM
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."
Sean Michael Kerner is a senior editor at InternetNews.com, the news service of
Internet.com, the network for
technology professionals.