Around six months ago, in an open letter to the Financial Times, Red Hat chief executive Matthew Szulik questioned whether Oracle “feels pressure from its long-time partner, Red Hat” because of the latter’s recent purchase of an open source middleware company, JBoss. Szulik at the time played down suggestions of a “showdown” between the two companies.
On Wednesday it seemed that showdown did occurr, when Oracle CEO Larry Ellison announced his company would be offering full support services to Red Hat Linux customers. The major portion of Ellison’s hour-long keynote at Oracle OpenWorld was dedicated to this announcement.
In a nutshell, Oracle’s strategy boils down to this: appropriate what Red Hat creates and build a support services business on top of it. As Oracle’s press release on the announcement says: “Oracle starts with Red Hat Linux, removes Red hat trademarks, and then adds Linux bug fixes.”
The lead in to the announcement, though, was fascinating as Ellison assumed the personas of thought leader, canny entrepreneur and smooth talking salesman – all in quick succession.
The Oracle CEO began by donning his “visionary” hat. He shared his thoughts on the future of computing, how grid computing will be integral to that future, and the growing importance of open source applications (notably Linux) in supporting the move to grid-based architectures.
Ellison then traced Oracle’s long involvement with the “grid” paradigm, starting way back in 1988 with the “non-shared memory clusters” of Oracle Database version 6, and the Real Application Clusters of a decade later, to the grid capabilities of today. He even offered a glimpse into the not-to-distant future, when – following the release of the Oracle Database 11g (currently in beta) companies will be able to use 128 servers in a grid configuration to run a database.
Ellison reminisced how, in 1998, when Oracle had to select the grid OS, Linux seemed the obvious choice, as Windows was not standards based. “We couldn’t get to the code. We couldn’t make Windows grid enabled. So we picked Linux.”
It was a crisp, closely reasoned, compelling lead-in to the big announcement.
And then around 20 minutes into the presentation, the Oracle CEO switched gears. Visionary metamorphosed into entrepreneur, as he announced what is arguably the biggest piece of “news” out of Oracle OpenWorld 2006: full Oracle support for Red Hat Linux.
The announcement takes on a whole new meaning when you consider its implications, which became clearer as Ellison proceeded.
Oracle’s offer of full support is being extended to all Red Hat customers, regardless of whether they are Oracle customers or not.
Red Hat today is a market leader in the development, deployment, and management of Linux and open source products for Internet infrastructure, ranging from embedded devices to secure Web servers. Would the Oracle initiative (clearly aimed at outpricing and outmaneuvering Red Hat) drive the Raleigh, NC–based company out of business?
Is this an initiative to promote Linux, or to kill Red Hat? one conference attendee asked Ellison – voicing the thoughts of many.
The Oracle CEO, expectedly, replied that vanquishing RedHat is not his company’s intention. He positioned the announcement as upping the bar on Linux support, fostering healthy competition (“isn’t that what capitalism is all about?”)
“Perhaps they (Red Hat) will compete aggressively,” he said. “They’ll have to improve their support, and hopefully they’ll compete on price as well.”
It’s a mystery to me why Ellison decided to provide the specifics of packages, prices, promotions and rebates himself, instead of leaving that task to one of his sales managers. From a visionary expounding ideas on the future of computing, to salesperson discussing products, pricing and packages was quite a metamorphosis for the Oracle chief.
All that aside, Oracle does deserve credit for putting a lot of thought into identifying and addressing the reasons for delayed Linux adoption by enterprises.
Ellison identified three key adoption barriers, and specified what Oracle is doing to remove these. The obstacles are:
Incomplete support – If the customer notices a problem (bug) in the Linux kernel, the vendor often fixes the bug in future versions of Linux, not the current one that the customer is running. So a large company, for instance, would be forced to upgrade thousands of servers to take advantage of the fix. This, the Oracle CEO said, is the biggest obstacle to Linux adoption today. He said Oracle, by contrast, would “back port” the bug fix, offering it for the current as well as later versions of Red Hat Linux.
Costly support – Supporting Linux-based deployments can be expensive, said Ellison, especially in cases where firms have to upgrade hundreds of machines to later versions of Linux to benefit from a bug patch. He said support that Oracle offers would cost way less – less than half of what Red Hat charges.
No indemnification protection – “With SCO [the SCO Group] suing everything in site, our large customers want to be indemnified,” Ellison said. “Currently Linux OS vendors [including Red Hat] don’t offer this.”
Attack as defense
Oracle has clearly invested a great deal of funds, time and talent in what it has branded its “Unbreakable Linux Program.” It has created Linux support and Linux engineering teams. It’s also throwing the weight of its global support resources – that includes 7,000 staff, in 17 centres, providing support in 27 languages – behind the program.
Is the software giant investing so much effort and resources with the sole objective of stealing Red Hat’s lunch? Not likely.
And as Bruce Richardson, an analyst with AMR Research Inc. in Boston observes: “Some companies are never going to want Oracle to support them. They will say: ‘you’ve got a great introductory price now. Red Hat disappears and suddenly you may double the [support] price on servers because we’re a captive base.'”
Red Hat and Oracle were strong allies earlier. But this appeared to change in April when Red Hat acquired middleware firm JBoss for US$350 million. Red Hat entered the middleware market, where it competes directly with Oracle.
It’s possible that by offering support services to Red Hat customers, Ellison is simply acting on the belief that attack is the best form of defense. In one stroke you restrict Red Hat’s entry into Oracle territory, and make some money to boot.
How much money? No one knows.
At this point there’s a plenty of speculation about the impact that full support for Linux Red Hat will have on Oracle’s revenues.
That’s partly because Oracle spokespeople have been less than forthcoming in providing data, according to Richardson. “Understanding this will give us some flavour of what Oracle is doing and what they want to achieve,” Richardson said. “They could have helped themselves if they made their case better.”
However, at the press and analyst briefing on Wednesday, the Oracle spokesperson said his company does not track what percentage of its apps and/or database installations run on Linux and what percentage on proprietary operating systems.
There’s another view that the real target of Oracle’s Unbreakable Linux program is Microsoft – and the goal is to shrink the Windows enterprise OS market.
It’s apparent from the huge resources it has put into this project
