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Some versions of RHEL, but not all (for example, 7.4), have ISO download options of both a "Binary DVD" (e.g. Red Hat Enterprise Linux 7.4 Binary DVD, 3.78GB) and an "Update Binary DVD" (e.g. Red Hat Enterprise Linux 7.4 Update Binary DVD (20180125), 4.07GB).

I can't find any documentation to explain the difference. It would make sense that the update binary DVD was a point release of 7.4 and used to upgrade from the main 7.4 release, but the dates on this particular version are 2018-03-27 for the Binary DVD, and 2018-03-23 for the Update Binary DVD. That is, the non-update DVD is newer than the update one. Plus the update DVD ISO is bigger in size which would not be expected for a simple patch update.

What is the difference between these two ISOs, and is there a restriction on what each can be used for (i.e. only for fresh installations, or only for upgrades from a particular version)?

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The 'Update Binary DVD' was released in January 2018 (see the date in the title itself -- that's the date when the ISO was created [1]) as opposed to the 'Binary DVD', which was released in July 2017 [2]. The 'Update DVD' was released in reaction to the Spectre and Meltdown security vulnerabilities.

It is, therefore, newer than the 'Binary DVD'. If you need RHEL 7.4, you should download the 'Update Binary DVD', which has the newer bits and is complete (though I would encourage you to go for the latest, i.e. RHEL 7.6 if possible).

The unfortunate and confusing 'Last modified' dates refer to the date when the particular download item was edited -- not necessarily to the date when the bits were created. In this case, the newer 'modified' date on the 'Binary DVD' got there because the download was initially removed (to make way for the 'Update Binary DVD') and later put back. I know, not very intuitive...

For further info about the indiv. download items, see Downloading Red Hat Enterprise Linux.

[1] "Red Hat Enterprise Linux 7.4 Update Binary DVD (20180125)"
[2] https://access.redhat.com/articles/3078

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