Siebel, PeopleSoft, JD Edwards, Retek – next stop Red Hat for Oracle on the acquisition trail?

For weeks, rumours have circulated that Oracle is developing its own version of Linux. In fact it seems that its strategy is instead to carve itself a large slice of Red Hat’s action by offering full support services for Red Hat's version of the Linux open-source operating system at a cut price!

Oracle has been offering some support, including patches of software bugs, for Linux since 2000, but with backing from Dell, Intel, Hewlett-Packard and IBM, this full support offering is an aggressive act.
"If you are a Red Hat Linux customer, you now have a choice," said Oracle CEO Larry Ellison said. "You can very easily switch from Red Hat support to Oracle support. We will fix the bugs.

“There is a lack of true enterprise support for the Linux operating system. This has slowed the adoption of Linux," he added. "This isn't about competing with Red Hat. This is about increasing the adoption of Linux in the enterprise."

Red Hat only provides support for the current versions of its operating system, but many enterprises run older versions for which no bug fixes are made available. The company also doesn’t indemnify its customers against intellectual property claims.

Oracle will download the Red Hat source code, apply patches and publish installable binaries free of charge. "This gives you the same level of support that you have for your database and middleware. This support is available for most other operating systems, just not for Linux," Ellison said. "Until today."

The service will be made available in 145 countries and in 27 languages at the basic price of $99 per system per year. The company is offering a 50 per cent discount for customers who sign up by the end of January 2007.

So is Ellison out to kill off Red Hat? Or acquire it? "This is capitalism," said Ellison. "We're competing. We're offering a better product at a lower price. We are trying to speed up the adoption of Linux. I don't think Red Hat is going to be killed. This isn't about Red Hat. The goal here is to make all versions of Linux better.”

Red Hat Chairman Matthew Szulik put a brave face on the announcement. "There are always concerns, but keep in mind that Oracle acknowledged that Red Hat is the technical leader in the market," he said.

Whether that thought comforted him as he watched Red Hat’s stock price plummet by 17% as Ellison completed his keynote address is another matter...