Latest move by Microsoft to support open source technology.

No, hell has not frozen over, but yes Microsoft and Red Hat have announced a major partnership today.

In a collaboration that would have been unthinkable just a few years ago, Microsoft – the purveyor of the mainstream and proprietary Windows OS – has partnered with Red Hat, the champion of an enterprise-class iteration of Linux. And analysts say the move is good for both companies.

What’s actually happening
The meat and potatoes of this relationship is the ability to run Red Hat software – most notably its market leading Red Hat Enterprise Linux (RHEL) — on Microsoft Azure virtual machines. This adds to Microsoft’s support in recent years of numerous Linux guest operating systems on its cloud, including those from Canonical, SUSE and Oracle.

Initially, Red Hat’s existing customer licenses will be eligible to be used on Azure, and within a couple months Azure customers will have an opportunity to spin up cloud-based versions of RHEL and pay for them as they are used, the companies said.

Amazon Web Services – Microsoft Azure’s biggest competitor in the IaaS market – has actually had on-demand and bring-your-own RHEL license for years.

There’s more to the Microsoft-Red Hat deal though. Both Microsoft Executive Vice President Scott Guthrie and Red Hat Executive Vice President of Products Paul Cormier said that this is one of the deepest partnerships that their companies have signed. Microsoft and Red Hat are organizing a team of engineers from both companies in Redmond (where Microsoft is headquartered) that will provide joint support to common customers. “There’ll be no finger pointing,” Cormier said.

No other partner has joint-engineering operations co-located on the Microsoft campus, Guthrie said.

There are a number of other, smaller parts of this deal ,too: Red Hat’s distribution of OpenStack and OpenShift – the company’s IaaS and PaaS platforms – will now support Windows OS, .net apps and Windows containers.

“All existing Red Hat development tools and Red Hat container technology can now run on Microsoft Azure,” Guthrie said. Red Hat’s CloudForms management platform, which basically controls virtual and private cloud environments, will eventually administer Azure resources. The new Red Hat on Azure services will be launched in coming weeks and months.

Building trust
“In historical terms this is a monumental announcement,” wrote Al Hilwa, IDC’s software development research director. His colleague, Al Gillen, said this move likely would not have been possible under Steve Ballmer’s reign at Microsoft.

Guthrie and Cormier, the two executives who led the partnership, said it required building up trust between the companies. “We’ve had a long history of competition and maybe there wasn’t much trust there,” Cormier said. “We decided to trust and give it a chance.”

Guthrie says the partnership should be looked at in the broader lens of moves Microsoft has made: Microsoft has worked to support Office 365 on Android and iOS; it now supports the major Linux distros on Azure (he says one-quarter of all VMs on Azure are Linux).

“I don’t view today as a complete outlier in terms of the approach or philosophy we’re trying to take,” Guthrie said on a press conference call. “But rather it’s very consistent with the openness and customer centricity that in particular Satya [Nadella] as our CEO has driven. That has really grounded our principles.”

What it means
Analysts say the move sets Microsoft up to better compete in the IaaS cloud market. “The new Microsoft has taken bold new steps and has been on a path to partner with its fiercest rivals of past years,” Hilwa wrote. “Strategically, this is what is required to be a player at scale in the cloud platform wars.”
“It’s a big win for both companies but a bigger win for Red Hat.”

Red Hat customers seemed to embrace the news too. “I think it’s a big win for both companies but a bigger win for Red Hat since Microsoft is now ‘all in’ with their distribution and technologies,” says Nicholas Gerasimatos, director of cloud services engineering at FICO, a big Red Hat user.

Many organizations use Microsoft SaaS tools like Office 365 and SharePoint and use RHEL for custom business applications or in their data center. “Microsoft and Red Hat’s decision to collaborate will allow their common customers to target Azure as a preferred public cloud,” says Charles King of PundIT.

Maybe that will be enough to give some customers reason to stay with Microsoft when it comes to public cloud instead of jumping to AWS.

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