Oracle Supports Red Hat Linux

By Alex Handy

November 15, 2006 —

SAN FRANCISCO — The rumored Oracle takeover of Red Hat obviously failed. While the murmurs from the valley insinuated that Oracle was considering a buyout of the Linux maker all year long, at the Oracle OpenWorld conference held here in late October, Larry Ellison made an announcement that could position Oracle as a buyer in the future. Oracle, said Ellison, now offers full enterprise support contracts for Red Hat Linux users, regardless of whether or not those users are Oracle customers.

The move is a slap in the face of Red Hat’s support department, and a threat to Red Hat’s support revenue, analysts and observers agree. Oracle’s support options are both cheaper and more diverse than those offered by Red Hat, according to Oracle’s announcement.

Oracle also said that it would harvest each new release of Red Hat Enterprise Linux, remove all trademarked images and files from the open-source software, then post the resulting disc images online for free distribution. That’s something that some other Linux distributions—such as Debian and Gentoo—already offer, but which Red Hat has never provided.

Oracle representatives at the conference frequently stated that Red Hat was the most commonly used Linux distribution in their customers’ environments. However, no one from the company would cite any statistics.

In his keynote address, Ellison said there are some issues that are slowing the adoption of Linux. “Maybe the most serious problem is the lack of true enterprise support for the Linux operating system.” That, said Ellison, means catering phone and patch support toward customers who can’t move their mission-critical systems to the latest and greatest revision of the operating system. It also means having the resources and people to answer questions around the clock, he added.

Ellison stated that his company had been pushing Linux for six years, and saw little uptake. Offering support and service contracts direct from Oracle, he said, would be the quickest way to expand enterprise Linux use.

Ellison may have overstated part of his case. For example, he claimed that Red Hat did not backport existing patches to older versions of its operating system, However, Red Hat does offer support for older versions of its Linux distribution.

Oracle’s support pricing starts at US$99 per computer per year, and runs up to $1,999 for the largest servers. In addition, Ellison announced introductory discounts of half-off until Jan. 31, 2007, and existing Oracle customers can try the new support options free for 90 days. Red Hat’s pricing was not made available.

Martin Schneider, senior analyst of enterprise software for The 451 Group, sees the Oracle support play as a potential path to acquisition. “Are there going to be people who say, ‘I’ll pay more to keep Red Hat alive?’” asked Schneider. “Sure. But if you take Mr. Ellison at face value and say, ‘This is more about Linux for the rest of the world,’ that’s a positive. Does Red Hat become so dependent on the Oracle support business that they’re a better target for takeover? Potentially.”

When asked whether Oracle had made an attempt to acquire Red Hat, Oracle chief corporate architect Edward Screven said, “No comment.”

Red Hat did not comment on the announcement but did issue a statement. “The opportunity for open source just got bigger. Oracle’s announcement further validates open source and Red Hat’s technical leadership. We will continue to optimize Red Hat Enterprise Linux for Oracle and compete on value and innovation,” read the official response.

Immediately following the closure of Ellison’s keynote, however, Red Hat stock was sinking as much as 10 percent in after-hours trading.

But there could be other casualties from Oracle’s support offerings, said 451 Group’s Schneider. Companies like SpikeSource that offer supported Linux application stacks could see their customers flock to the Oracle support offerings.

Schneider added that the difficulty of aggregating and distributing updates for various stack pieces is vastly decreased with a company the size of Oracle offering automatic patch installation for the operating system. Schneider said that it’s a matter of time before those updates move up the stack and shove third-party stack companies out of the playing field.

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