Red Hat’s message: Take this, Amazon, IBM and other big “cloud” computing players in a market that is expected to grow 36 percent a year through 2016, reaching a value pf $19.5 billion, according to research firms TheInfoPro and 451Research.

The open source Linux software leader is teaming with privately held Dell to develop and sell “cloud” computing solutions based on Red Hat’s OpenStack Platform. The two firms have worked together over the past 14 years on numerous open source solutions.

Now the firms want to make cloud solutions based on the OpenStack framework and incorporating Red Hat Enterprise Linux. The partnership was announced Thursday at Dell’s global conference in its home base of Austin, Texas.

Investors reacted positively, sending Red Hat shares nearly $1 in early trading Thursday. Shares finished the day up 20 cents at $46.35.

Patrick Morehead, writing at Forbes, likes the move.

“What I consider to be a flanking move on Hewlett-Packard and IBM, Dell is partnering with Red Hat to build out Dell’s cloud delivery portfolio,” he wrote.

Financial news website SeekingAlpha concluded that the deal is good news for Red Hat:

  • “Such a tie-up would help Dell counter rivals such as H-P and IBM, who have aggressively rolled out and/or acquired IaaS [infrastructure as a service] platforms. It would also help Red Hat gain IaaS share as it contends with tough competition from Amazon and a slew of smaller players.
  • “While Amazon towers over the public cloud IaaS market, the Red Hat/Dell solution would focus on enabling private/hybrid cloud deployments. Microsoft and VMware (among others) provide direct competition in this space.”

OpenStack Push

Red Hat unveiled a big OpenStack push in November. It also received a big boost recently when Google said it would incorporate Red Hat into its cloud offerings.

“Our collaboration with Dell keeps getting better and today’s announcement to co-engineer OpenStack solutions marks a significant milestone for both companies and customers,” said Paul Cormier, president of Products and Technologies for Red Hat. ”Just as we successfully collaborated with Dell to establish Red Hat Enterprise Linux as an enterprise industry standard, we’re now extending our collaboration to help establish Red Hat Enterprise Linux OpenStack Platform as the standard for open private cloud in the enterprise. Dell and Red Hat are committed to jointly developing and delivering enterprise-grade OpenStack offerings to help customers pursue private cloud today, and advanced computing models in the future.”

The partnership is far-reaching and designed to beef up both firm’s efforts in the extremely competitive and growing cloud market.

Dell has agreed to become the first “OEM” or original equipment manufacturer for Red Hat’s Enterprise Linux OpenStack Platform.

Red Hat is investing heavily in the cloud space and is a huge supporter of the OpenStack movement as opposed to proprietary closed cloud solutions. At the same time, Red Hat continues to update and expand its Enterprise Linux offerings, which are widely used by financial institutions.

The joint Dell-Red Hat cloud product will utilize Dell hardware.

Dells own Cloud Services group will sell the products through a group devoted to the service.

Financial terms were not disclosed.

Red Hat has become the largest contributor to the OpenStack development portfolio.

Citing results from research firm IDC, Red Hat notes on its website that 85 percent of enterprise customers deploying cloud services plan to utilize OpenStack. 

Red Hat also notes that 90 percent of Fortune 500 companies utilize Red Hat products and services.