• Amazon last month quietly started offering enterprise customers its own version of Linux called Linux 2.
  • Customers can run Linux 2 in Amazon’s cloud or on their own in-house servers.
  • It marks the first major effort by Amazon to offer software that will run on customers’ computers rather than just in its cloud.

Amazon’s cloud business quietly just took a big step outside the cloud.

Last month, soon after Amazon Web Service’s giant tech conference, the company started offering its enterprise customers a new version of the Linux operating system it calls Amazon Linux 2. The new product marks a departure for the cloud-computing juggernaut, as the software can be installed on customers’ servers rather than run from Amazon’s data centers.

Amazon will rent access to Linux 2 to its cloud customers. But it’s also making the software available for companies to install on their servers. It can run on many of the most popular server software programs and technologies, including Microsoft’s Hyper-V, VMware, Oracle’s VM VirtualBox and Docker.

Amazon is offering five years of support for Linux 2, including things like security patches and bug fixes, just as other software vendors do for their wares. And it has designed Linux 2 to work well with open-source databases, programming languages, and other popular applications.

As the product's name implies, this is actually the second version of Linux that Amazon has offered. Customers could run the previous version on their own servers also, but in a much more limited way.

The move is significant, because Amazon is the company that popularized cloud computing and in the process threatened the businesses of companies that provide server hardware and software. Instead of buying servers and software, enterprises can now rent it all from the cloud and pay fees based on how much they actually use.

AWS' success has seen enterprises ditching servers and storage and sometimes unplugging all of their data centers to go all in on Amazon's cloud. This trend has hurt legacy giants including EMC, Hewlett Packard, and IBM.

Microsoft, Oracle (which has its own flavor of Linux), Red Hat, and others have been trying to counter AWS with a concept called hybrid computing. Hybrid technology allows enterprises to tap into both the cloud and their own on-site servers and switch between the two.

Linux 2 is another attempt for Amazon to elbow into the hybrid world. Last year it partnered with VMware to allow VMware's customers to easily move their apps to Amazon's cloud.

Linux 2 is also a subtle shot at the biggest player in the Linux market: Red Hat. Amazon even announced Linux 2 on the same day Red Hat announced its third-quarter results. Even though Red Hat reported a solid quarter that beat expectations and offered better-than-expected guidance for the full year, its shares sold off on the Amazon news. The two companies are partners, but Amazon has a reputation for competing with its partners.

Still, Red Hat investors may have overreacted. In a research note, Deutsche Bank's Karl Keirstead advised investors to calm down. While Amazon's release of Linux 2 is "hardly a good thing" for Red Hat, he said, the software is geared toward development and testing rather than running major business apps. Companies won't be ditching Red Hat anytime soon, Keirstead wrote, reiterating his "buy" rating on Red Hat's shares.