Oracle's Red Hat salvo falls short of mark
Published: 27 Oct 2006 15:45 BST
Oracle chief executive Larry Ellison fired a broadside at Red Hat on Wednesday. But now that some of the smoke has cleared, it appears some cannonballs went wide of the mark.
Oracle pledged to support Red Hat Enterprise Linux — charging less than half of Red Hat's list prices — and to supply its own free version of that product built from the publicly available source code. Oracle pledged high-grade support from its own army of employees — including Linux kernel programmers who understand the most technical details.
The software giant essentially announced a plan to divert Red Hat's support subscription revenue stream into its own coffers. Red Hat's stock plunged 24 percent Thursday, closing down $4.68 at $14.83 as investors erased $681m (£363m) in market capitalisation.
Red Hat's business is under new pressure, but it won't be simple for Oracle to walk off with all its customers. The big sticking point for Oracle: potential incompatibility with genuine Red Hat Enterprise Linux (RHEL).
Take the case of Cisco Systems, which has more than 5,000 RHEL subscriptions for its developers' Linux workstations. One person involved in making sure the Linux systems run smoothly is concerned that Oracle's Linux lacks the hardware and software certifications possessed by RHEL and its main current rival, Novell's Suse Linux Enterprise Server (SLES).
"It's going to take years to develop the relationships with outside vendors currently certified for Red Hat and Suse," said the technician who requested anonymity. "For company like mine, we can't go out on a limb like that. It has to be a certified solution."
The certification hurdle
Oracle argues that any application that will run on RHEL will also run on its version of Linux rebuilt from Red Hat's source code, but the Cisco tech isn't having any. "It's not going to be exactly the same," the tech said.
Others are cautious, too. "I wouldn't try to apply an Oracle operating system patch to one of my RHEL servers. That would probably lead to some instabilities," said Tabor Wells, director of technology for Smarter Living, which runs the SmarterTravel.com and BookingBuddy.com websites.
That opinion matches that of CentOS programmers, who have been cloning RHEL based on source code for years.
BEA Systems, an Oracle competitor that sells Java server software that runs on Linux and other operating systems, is an instructive example.
"You wouldn't believe the complexity of our certification process. We have to certify every version of an operating system with every version of our product on different hardware, using different Java virtual machines... There's an unbelievable cost to adding another operating system to the matrix," said Eric Stahl, senior director of investor relations. "If Oracle comes out with its own thing unsupported by companies like us, customers won't adopt it."
Oracle's pledge to provide its own bug fixes — in some cases fixes that Red Hat isn't providing — poses further problems. Oracle said it will periodically re-synchronise its software with Red Hat's, but that means the company will remain reliant on Red Hat to avoid straying down a different, incompatible path in the software development road.
"The major risk is that Oracle will fork Linux. If Red Hat does not incorporate Oracle's bug fixes, Oracle will fork the operating system, which could limit its impact," First Albany analyst Mark Murphy said in a report on Thursday.
Punishing Red Hat
Red Hat, through its JBoss acquisition, has had the temerity to start competing directly with Oracle. Now Oracle has returned the favour, and even if customers don't plan to buy, they can benefit.
"Customers now have a viable way to drive down the cost of running Linux and are likely to use this information in contract negotiations even if they don't switch," said Credit Suisse First Boston analyst Jason Maynard. "This move was very aggressive and is likely going to cause...
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