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RHEL doesn't have to worry about Canonical....

If we just take the latest Canonical LTS release (8.04) I think it's safe to say RedHat doesn't have to worry about Canonical's offerings in the server market just yet.

Ubuntu and it's deratives are great for desktop users, new to Linux. However many seasoned *NIX veterans will quickly be put off by some of the practices Canonical takes (using loads of beta-quality packages in a LTS, breaking things midway in a release cycle etc etc) Canonical's QA department is still seriously lacking compared to RedHat. In all the time I've worked with RedHat software I've only seen a single serious goof (bind package which broke the DNS service) and a few minor ones (RHEL4 net-snmp packages, 2.6.9-42 kernel in RHEL4 wrt WiFi)

Also, Canonical doesn't (yet?) have the tools for people to manage large installations, such as RedHat's Satellite package. Such a tool is a must-have, imagine having to manually update hundreds of servers, containing 3 or 4 different releases, after issues have come up.

As for the desktop, I prefer my desktop to "just work" for a long time, so I use RHEL/CentOS there as well. Which means I only have to worry about upgrading every 3 years or so.... having tried Kubuntu for 2 years, constantly having to "fix" things after even minor upgrades was getting quite tiresome. Now, thanks to Dag and others like him I can still get most of the "bling" that's in Ubuntu on my CentOS/RHEL machines without sacrificing stability.

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