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October 25, 2006

The big boys beat up Red Hat

Posted by David Hunter at 9:02 PM ET.

Gavin Clarke in fine Register style:

Five months after Red Hat snatched JBoss from under the Oracle’s nose, his company has struck back with a service and support package designed to gut Red Hat like a fish.

Dressed in the guise of promoting adoption of Linux in mission-critical environments, Ellison today at Oracle Openworld, announced three-tiered support for Red Hat Enterprise Linux versions 3 and 4 starting at $99 per system per year. It’s not necessary for Red Hat customers to be running Oracle products.

Barely able to suppress excited giggling, Ellison claimed Oracle would undercut Red Hat by up to 60 per cent. Oracle middleware and application users on Red Hat and switching in the next 90 days get Oracle’s support for an additional 50 per cent off.

This could hurt Red Hat, a company that looks to support and maintenance for the bulk of its revenues.

“We want to make all the Linux better,” Ellison said. “The better Linux gets the more successful we will be.” He confirmed Oracle would “absolutely” deliver an entire open source stack running from operating system to applications.

If that seems a little over the top, check out the Oracle press release via Steve Hamm at BusinessWeek Online:

Today Oracle announced that it would provide the same enterprise class support for Linux as it provides for its database, middleware and applications products. Oracle starts with Red Hat Linux, removes Red Hat trademarks, and then adds Linux bug fixes.

Currently, Red Hat only provides bug fixes for the latest version of its software. This often requires customers to upgrade to a new version of Linux software to get a bug fixed. Oracle’s new Unbreakable Linux program will provide bug fixes to future, current, and back releases of Linux. In other words, Oracle will provide the same level of enterprise support for Linux as is available for other operating systems.

Oracle is offering its Unbreakable Linux program for substantially less than Red Hat currently charges for its best support. “We believe that better support and lower support prices will speed the adoption of Linux, and we are working closely with our partners to make that happen,” said Oracle CEO Larry Ellison. “Intel is a development partner. Dell and HP are resellers and support partners. Many others are signed up to help us move Linux up to mission critical status in the data center.”

And that brings us to the big boy part of the story as described by Michael Kahn and Eric Auchard at Reuters:

The news was met with a flood of endorsements from Oracle’s closest technology partners, including Intel Corp., Dell Inc. and EMC Corp. International Business Machines Corp., a major rival in database and middleware software, also signaled its support for the move.

Now I don’t follow the daily doings in the commercialized Linux market, but Red Hat certainly seems to be short on friends. I also wonder what Oracle has after Red Hat goes casters up – maybe they plan to buy it cheap? In any case, Red Hat’s share price went in the tank after this was announced.

So what’s the Microsoft hook? Just what you’d expect:

Apart from the impact on Red Hat, the move is significant for Oracle because it can now supply not only databases and applications but also an underlying operating system, giving it what the industry calls a complete “software stack.”

Analysts also see it as an important counter-balance to the Windows operating system of Microsoft Corp., Oracle’s main rival.

It looks like Mr. Ellison got himself an operating system in a typically odd Ellison way.

Filed under Coopetition, Dell, EMC, Hardware, IBM, Intel, Linux, Microsoft, Open Source, Oracle, Red Hat

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