It's a familiar story: Like so many other telecom services providers, CDLAN is trying to push into cloud services. For CDLAN, the path to SaaS and cloud services involves an open source twist: Red Hat Enterprise Virtualization (RHEV) and Red Hat Enterprise Linux (RHEL). Is this a sign of things to come for Red Hat?

First, the nuts and bolts of the news: CDLAN is a service provider in Italy. The company is deploying a next-generation data center, which will offer a SaaS platform that runs Enterprise Resource Planning (ERP), email and e-learning applications to customers. The datacenter's foundation platform is RHEL with RHEV.

CDLAN claims the RHEL-RHEV combination is 6o percent more cost effective than proprietary solutions -- a thinly veiled reference to VMware, Talkin' Cloud believes.

Red Hat has spent the past two years or so trying to position RHEV as a true market alternative to VMware. The latest moves came in January 2012, when Red Hat Enterprise Virtualization 3.0 launch and a related marketplace debuted. Around the same time, Red Hat unveiled a certification for applications that integrate tightly with RHEV.

Red Hat vs VMware Revenues


Still, Red Hat is in catch-up mode against VMware in the virtualization market, where thousands of partners continue to rally around VMware. For its most recent quarter, VMware revenues were $1.06 billion, up 27 percent from Q4 2010. Quick math suggests VMware is roughly 4 times larger than Red Hat. And the majority of Red Hat revenues don't yet involve virtualization.

As Red Hat stated it in a recent SEC filing, "our Red Hat Enterprise Virtualization and cloud computing offerings are based on emerging technologies, and the potential market for these offerings remains uncertain."

That said, Talkin' Cloud believes RHEV will continue to gain momentum with certain cloud service providers -- especially those that have already invested heavily in Red Hat Enterprise Linux.