Oracle's Unbreakable Linux not denting Red Hat
Even as the global server market contracts by 14 percent, and Linux server sales decline 7 percent (Windows dropped 17.8 percent), according to IDC, Red Hat's Linux server business is swimming against the current.
A February 11 Piper Jaffray report ("Red Hat Inc.: Buy. Survey Shows Red Hat Will Be a Top Share Gainer") says its "survey of 89 domestic Oracle applications customers indicates that Red Hat is gaining IT budget share."
This isn't surprising. In late 2008, a Goldman Sachs report found that 44 percent of enterprises surveyed were planning to increase their Red Hat investments, even as budgets fell. In a downturn, money seeks value, and Red Hat has been delivering value in spades.
What is surprising, however, is that more companies haven't sought to trim their Red Hat pricing further by going to a Red Hat knockoff like Oracle's Unbreakable Linux. According to Piper Jaffray's report, however, this isn't happening:
The strong showing of support for Red Hat from a broad sample of large, sophisticated IT vendors is highly noteworthy, in our opinion. Red Hat's unique ability to leverage advancements from the open-source community creates a superior price-performance equation for customers.
In turn, this superior price-performance experience drives Red Hat's ability to become an increasingly pervasive layer of enterprise-computing infrastructure...Oracle's own customers appear to vote in favor of Red Hat rather than Oracle's own Unbreakable Linux offering...If Oracle cannot compete effectively against Red Hat inside its own customer base, we highly doubt it can do so outside its customer base.
Why? Why aren't even Oracle customers shaving costs with Oracle's Red Hat knockoff?
It's the value. Oracle's own Linux support policy site is enough to give prospective customers pause. For one thing, Oracle offers "Basic" and "Premier" Linux support plans. The Basic offering, which is the pricing with which Oracle has blandishing the market to demonstrate how cost-effective it is, expires after three years. Three years into the program, in other words, customers are going to get hit with the "switch" part of Oracle's Unbreakable "bait-and-switch."
It gets worse. Oracle also reserves the right to stop supporting its Linux customers at any time (PDF):
It may become necessary as a part of Oracle's support life cycle to desupport certain Enterprise Linux and Oracle VM program releases and, therefore, Oracle reserves the right to desupport certain Enterprise Linux and Oracle VM program releases.
How could any chief information officer sign up for this, especially given Oracle's tenuous relationship to the Red Hat product it purports to be supporting? Why would any CIO invest in Unbreakable Linux rather than simply going directly to the source, Red Hat?
According to Piper Jaffray's survey, they're not. Enterprises go with trusted brands, especially in times of economic uncertainty. That's why Oracle's database business will certainly grow through the recession, but its Linux business will not. Red Hat is the trusted brand in Linux, and for good reason. Red Hat's support policies demonstrate an understanding of what Linux customers require: mission-critical support for mission-critical deployments.
Oracle claimed that it was creating its Red Hat knockoff because Red Hat's support wasn't good enough. The facts suggest otherwise. At a lower cost and allegedly superior support, Oracle should have thousands upon thousands of Unbreakable Linux customers by now. It doesn't.
In fact, how's this for a slap in Oracle's face? Early on, it claimed that Yahoo was dumping Red Hat for Oracle's Linux offering. For several reasons, however, inside sources at Yahoo are telling me that most, if not all, of the servers Oracle claimed at Yahoo have since shifted back to Red Hat Enterprise Linux.
Oracle needs a new Linux story. It might be wise to go back to its original Unbreakable Linux story: Red Hat Enterprise Linux. Delivered and supported by Red Hat. CIOs like that story.
Follow me on Twitter at mjasay.
Matt Asay brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is vice president of business development at Alfresco, a company that develops open-source software for content management. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. You can follow Matt on Twitter @mjasay. 
I believe what is really happening is Oracle trying to further commoditise other parts of the stack. This might lead to further account control and take more of the customer's budget for proprietary technologies to further lock the customer in.
In the meantime Oracle cannot deliver the Value customers really want in the Operating System space. The only way is to do it properly - not with a copy of a copy. What's the Oracle roadmap for Linux ? Is Oracle really willing to step up & invest in doing it's own version of Linux and be able to give a roadmap ? You can't be half pregnant.
- by wleewillard March 11, 2009 7:35 PM PDT
- Lettyel
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(4 Comments)Please only comment on articles when you don't work for a company refuting the article. The fact you sent out an Advertisement for a product, on an unbiased web page tells me you are probably setting behind a computer in India getting a paycheck from Oracle. That is unfair to all consumers.