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Red Hat CEO suggests Oracle is feeling the heat
Rob writes "The previously rosy relationship between Oracle Corp and Red Hat Inc appears to have
soured following Red Hat's acquisition of JBoss Inc and Oracle CEO Larry Ellison's
suggestion that his company could move into the Linux business. Red Hat's chief executive,
Matthew Szulik, has written in response to a recent interview with Ellison in which
Ellison suggested the company would be interested in distributing and supporting Linux.
"Is it possible that the dominant provider of databases feels pressure from its
long-time partner, Red Hat, because of our recent purchase of an open source middleware
company, JBoss?" Szulik asked, although
he also played down suggestions of a "showdown" between the two companies."
That'd be nice, except that with IBM DB2 on IBM AIX running on IBM RS/6000 systems, they still point fingers. I have repeatedly been forced (as a customer) to make different divisions within IBM talk to each other. It would seem to be good, but it really is almost the same.
-WS
An operating system should be like a light switch... simple, effective, easy to use, and designed for everyone.
There's a funny thing about market economies. The market produces what people have shown an interest in paying money for. If Oracle were to buy Red Hat with the intention of shutting Red Hat down, then you can basically guarantee that several other "Enterprise" Linux distributions would spring up as if by magic. This is especially true if Oracle paid current market prices for Red Hat. The source code in question would still be available, and there would be a large community looking for a new home.
In the long run Oracle is likely to have the same problems as Sun. Like Sun, Oracle's real problem is that Red Hat offers a software stack that is competitive with Oracle's software stack while maintaining an R&D budget that is a couple orders of magnitude smaller than Oracle's budget. Oracle's size is precisely the problem. As commodity software becomes more and more widespread the ridiculous profit margins that Oracle needs to survive will get harder and harder to produce. Sure, there are lots of Oracle customers that can't really afford to move to a lower cost but less featureful software stack, but Oracle is going to find that an increasing number of its customers are unwilling to pay for features that they don't really need or use. Lots of technical folks get all excited about "Enterprise" software, but in the long run inexpensive commodity software that actually gets used tends to move up the technology stack and crowd out software that relies on the huge profit margins that can be found at the high end of the spectrum. Red Hat's cost structure is designed around taking advantage of the much lower profit margins associated with commodity Free Software. Oracle's cost structure, on the other hand, is designed around the much higher profit margins that Oracle has historically been able to squeeze out of the market. Oracle can pretend that it can compete with Red Hat, but really it can't, not without shedding a lot of its workforce. If Oracle were to lower its workforce so that it was competitive with Red Hat then customers that are currently paying huge margins for Oracle products and services would undoubtedly take their business elsewhere.