Red Hat shares are lower this morning after Jefferies & Co.’s Katherine Egbert cut her rating on the stock to Hold from Buy, trimming her price target ot $19 from $23. Her primary issue with the stock: the impact server virtualization has on Linux demand.
“In ongoing attempts to reduce the cost of maintaining their compute infrastructures, many companies have looked in recent years to the cost savings offered migrating legacy Unix systems to lower cost Linux servers,†she explains. “However, there is now a greater opportunity to reduce costs via virtualization, as technology from VMware allows Unix and Unix apps to be run in a virtualized container on existing hardware, even alongside Windows. This direct-to-virtualization solution negates the need for new Lintel hardware to support legacy systems. New servers are also increasingly shipped with Windows + VMware, further robbing Linux of market share at the OEM level.â€Â
“In ongoing attempts to reduce the cost of maintaining their compute infrastructures, many companies have looked in recent years to the cost savings offered migrating legacy Unix systems to lower cost Linux servers,†she explains. “However, there is now a greater opportunity to reduce costs via virtualization, as technology from VMware allows Unix and Unix apps to be run in a virtualized container on existing hardware, even alongside Windows. This direct-to-virtualization solution negates the need for new Lintel hardware to support legacy systems. New servers are also increasingly shipped with Windows + VMware, further robbing Linux of market share at the OEM level.â€Â
Link: blogs.barrons.com
Category:
- Linux
