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 Redwood Shores, Calif.-based 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 $681 million in market capitalization.
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.
"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 Web sites.
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 diff Java virtual machines...There's an
unbelievable cost to adding another operating system to the
matrix," said Eric Stahl, senior director of investor
relation. "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-synchronize 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 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 favor, 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 disruption
in the Red Hat business at some point in the coming
quarters, as Oracle accounts (for or) influences around 10
(percent) to 15 percent of their business."
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