BOSTON (Reuters) - Red Hat Inc. (RHT.N) and IBM (IBM.N) formed a partnership to develop, sell and support Red Hat's Linux software for IBM's mainframe computers, people familiar with the arrangement said on Tuesday.
The agreement, which the companies plan to announce at a Red Hat users conference that begins on Wednesday, applies to Linux software for International Business Machine Corp.'s System z mainframe computer systems, the sources said.
The vast majority of Linux software that is currently used on System z is from Red Hat's main rival, Novell Inc. NOVL.O
IBM's partnership with Red Hat is an endorsement of advances that the software maker has made in adapting its technology for use by large institutions, analysts said.
"It's potentially a huge credibility gain for Red Hat," said Trip Chowdhry, an analyst with Global Technology Research. "It shows that Red Hat is enterprise class."
IBM and Red Hat declined comment.
IBM and Novell have long worked together on developing, selling and servicing Novell's SUSE version of the Linux operating system for use on IBM's System z computers.
The IBM, Red Hat tie-up creates a similar cooperation. They form a joint engineering team to expand the capabilities of the Linux software, including enhancing security on the mainframe computers, according to the people familiar with their plans.
Mainframes are used to run computer systems that are critical to the functioning and security of banks, stock exchanges, government agencies, and other large institutions that crunch large amounts of data, which is often sensitive in nature.
Red Hat and Novell are urging businesses to adopt their versions of Linux across their entire computer networks - from desktop computers to servers and mainframe computers. They say that doing so will save their staff the trouble of having to learn to work with more than one set of computer code.
Red Hat already works closely with IBM to market its software on the computer maker's smaller systems. But until now Novell has enjoyed preferred status when it comes to selling software for IBM's mainframe computers, analysts said.
"Novell has been the de facto choice on IBM's System z mainframes," said Global Equities Research analyst Trip Chowdhry.
Linux is the most popular type of so-called open-source software, a movement begun as a grass-roots approach to development of computer programs.
Varying versions of the operating system are available from dozens of sources. While they're all based on the same core code, which is known as the Linux kernel, most are not compatible with each other.
Last year, Novell introduced a desktop version of SUSE Linux at the same time as it launched upgrades to packages for more powerful computers. It also released software to make it easier for a company's IT staff to make all of those computers work together.
"Our 'desktop to data center' strategy and solutions for Linux in the enterprise have resonated well with clients," said Novell Senior Vice President Roger Levy. "We are not surprised to see Red Hat attempt to adopt our positioning and challenge our success in the enterprise."