October 27, 2006 4:00 AM PDT

Oracle has yet to prove Linux cred

Oracle CEO Larry Ellison fired a broadside at Red Hat on Wednesday. But now that some of the smoke has cleared, it appears some cannonballs went wide of the mark.

Oracle pledged to support Red Hat Enterprise Linux--charging less than half of Red Hat's list prices--and to supply its own free version of that product built from the publicly available source code. Oracle pledged high-grade support from its own army of employees--including Linux kernel programmers who understand the most technical details.

The Redwood Shores, Calif.-based software giant essentially announced a plan to divert Red Hat's support subscription revenue stream into its own coffers. Red Hat's stock plunged 24 percent Thursday, closing down $4.68 at $14.83 as investors erased $681 million in market capitalization.

Red Hat's business is under new pressure, but it won't be simple for Oracle to walk off with all its customers. The big sticking point for Oracle: potential incompatibility with genuine Red Hat Enterprise Linux (RHEL).

Take the case of Cisco Systems, which has more than 5,000 RHEL subscriptions for its developers' Linux workstations. One person involved in making sure the Linux systems run smoothly is concerned that Oracle's Linux lacks the hardware and software certifications possessed by RHEL and its main current rival, Novell's Suse Linux Enterprise Server.

"It's going to take years to develop the relationships with outside vendors currently certified for Red Hat and Suse," said the technician who requested anonymity. "For company like mine, we can't go out on a limb like that. It has to be a certified solution."

The certification hurdle
Oracle argues that any application that will run on RHEL will also run on its version of Linux rebuilt from Red Hat's source code, but the Cisco tech isn't having any. "It's not going to be exactly the same," the tech said.

Others are cautious, too. "I wouldn't try to apply an Oracle operating system patch to one of my RHEL servers. That would probably lead to some instabilities," said Tabor Wells, director of technology for Smarter Living, which runs the SmarterTravel.com and BookingBuddy.com Web sites.

That opinion matches that of CentOS programmers, who have been cloning RHEL based on source code for years.

BEA Systems, an Oracle competitor that sells Java server software that runs on Linux and other operating systems, is an instructive example.

"You wouldn't believe the complexity of our certification process. We have to certify every version of an operating system with every version of our product on different hardware, using diff Java virtual machines...There's an unbelievable cost to adding another operating system to the matrix," said Eric Stahl, senior director of investor relation. "If Oracle comes out with its own thing unsupported by companies like us, customers won't adopt it."

Oracle's pledge to provide its own bug fixes--in some cases fixes that Red Hat isn't providing--poses further problems. Oracle said it will periodically re-synchronize its software with Red Hat's, but that means the company will remain reliant on Red Hat to avoid straying down a different, incompatible path in the software development road.

"The major risk is that Oracle will fork Linux. If Red Hat does not incorporate Oracle's bug fixes, Oracle will fork the operating system, which could limit its impact," First Albany analyst Mark Murphy said in a report Thursday.

Punishing Red Hat
Red Hat, through its JBoss acquisition, has had the temerity to start competing directly with Oracle. Now Oracle has returned the favor, and even if customers don't plan to buy, they can benefit.

"Customers now have a viable way to drive down the cost of running Linux and are likely to use this information in contract negotiations even if they don't switch," said Credit Suisse First Boston analyst Jason Maynard. "This move was very aggressive and is likely going to cause disruption in the Red Hat business at some point in the coming quarters, as Oracle accounts (for or) influences around 10 (percent) to 15 percent of their business."

CONTINUED: Re-evaluating pricing…
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32 comments

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stock price
maybe "all" Oracle wants to do is to buy Red Hat, and Unbreackable Linux is only build to give them a huge 30% discount on the price of the compagnie.

Wouldn't that make any sence?
Posted by suuperjan (2 comments )
Reply Link Flag
Bingo!
You make perfect sense. Others think Oracle is trying to kill off RH, which makes no sense. Oracle needs RH, and the best case scenario for Oracle is if they can directly control all the RH decisions, then there's no forking, and certifications can be brought in line with Oracle's needs. What better way to do that than to buy RH? And what better way to get a deal than to drop some FUD on RH and the market (similar to the PeopleSoft purchase)?
Posted by ejevo (134 comments )
Link Flag
Oracle claim of Linux support is a total Hoax
This Advertising by Oracle that they are offering support for Linux for $99 and for so called
enterprise Linux for $399 per server is a total lie. A pure false Advertising.

Call Oracle, the number they gave on this Ad which ran in such places ad WSJ and you will see what I mean. In case you dont have it is 1.800.ORACLE1
I called them, after 3 attempts I finally got to a person who:
1- Did not know what version of Linuix Oracle was supporting. Imagine something as elementary as which version of Linux are you supporting he could not reply to.
2- Did not know what the support entailed. Can you imagine that!
3- Asked him if support means whether they would remotely access our server and fix our Linux installation he replied they have no means of remotely accessing servers!
Free Winscp anyone!

This is just one more Hoax coming out of Silicon Valley.
Certainly not on par of Google buying UTube for $1.6Bill Hoax, which was purely one hand of Sequoia capital selling to the other hand to jack up the price of Google so they could dump Google shares on public, but still pretty big Hoax.

P.S., Oracle provides support of Oracle DB at about $50K per year per server, starting.
They just sold a support package to one government agency for $20Mill per year, etc.
So if they charge $50,000+ per year for Oracle DB Support, how the HEK are they going to provide Linux support for $399 per year.

BTW, I finally asked the Oracle person on the other side of the phone, that I wanted to buy Linux enterprise support for $399 per year that they are Advertising, called his/Larry's bluff, he then took my number and never called back. I hope they do. Since then I would be able to replace our system Admin who we pay $6000 per month with 24/7 support from Oracle for $399 per year.

Again, this Oracle claim is just one more lie/Hoax out of silicon valley.
Posted by caudio_roma (57 comments )
Reply Link Flag
You nailed it!
Both in your Google & Sequoia comment, and Oracle's actions. All
driven by the Valley & the Dollar. I can't believe more wasn't said
about the Google/Sequoia scam, it was so obvious. That $15
million investment into Youtube made Sequoia close to $2 billion.
Posted by thecatch (49 comments )
Link Flag
Not a Hoax...
Just because the support tech just took his first call asking about a new support program did not know what the company was offering does not mean they are not offering the support at all. You do not sound stupid enough to believe that Oracle can replace a full time tech with remote support for such a cheap price. Stop being ludicrous and realize that the support is more general in nature.

You are right to be suspect about what they will offer and what version(S) of Linux they will support. They gain an advantage in trying to support the OS their application is running on top of. This makes them a one-stop shop. The customer does not need support from Red Hat and Oracle when things between the OS and Application act up. That is also part of the Linux advantage you should be leveraging for your self already.

But I am probably not telling you anything you don't already know...
Posted by zaznet (1138 comments )
Link Flag
You must be new around here...
...as sales reps being clueless about recently released products/services is nothing new in enterprise technology. I don't think anyone in their right mind would sign up for a support offering around a non-core product from a vendor the day it was announced.
Posted by nottlv (13 comments )
Link Flag
Trust me, it is a hoax, but read on for their strategy
It is an absolute hoax. Oracle is completely unprepared for this move in reality, but it doesn't matter. The move to become an open source company isn't a long term strategy (yet), instead it is a super effective means of 'fighting retreat'. In effect their move freezes the market, just like MS's pre-announcing of vapor ware to stifle a competitor that has a technology lead in a particular area. Except in this case, Oracle announces something that basically puts them in position of power; they now are controlling more of the pace of the creep of how open source is moving up the stack (OS->DB->AS...), very similar to their purchase of the open source database engine company Innobase. Red Hat's move into JBoss was an acceleration of that creep, and a huge threat to Oracle which needs time and control.

Oralce's real strategy is simple: cause as much confusion in open source stack debate, do whatever you can to slow down the inevitable, until you have to give in, and then give in in little chunks. (Want proof: just take a look at their same strategy against MS SQL Server with their Oracle's Standard Edition DB.) All the while you are making cash hand over fist charging a premium for your proprietary solutions until the open source creeps catches up and forces you to give in, and at that point you give in just enough to remain in technical partity and then tout your support as a differentiator. In the long run (a very long one in the case of Oracle) you become a (support) service provider and just charge subscriptions. This is the open source bus. model

This strategy suits Oracle great. While slowing down the open source creep into the infrstructure stack, they quickly spend a huge chunck of their exorbitant profits trying to get their Fusion technicology to work. By the time they the stack is completely commoditized, they have their "new" apps up and working and they give up on the stack license sales and just go into the open source business model of support there and then charge a premimum for their apps.

I could tell you about how the entire company is not set up culturally or organizally to truly support Linux effectively, or why it's marginally valuable to their existing customers and terrible for the open source movement, but it doesn't matter. Their strategy, which Ellison himself laid out perfectly, is simple: it's capitilism, and it's effective.

My biggest issue with all this is that Oracle used to be an innovator and a champion of standards (such as a common Linux platform ala LSB). But lately all their moves are the same story re-cast. Oracle has been providing Linux support for years (called Unbreakable Linux); their grid story is just the Oracle parallel server story from the early 90's (decade old), their sofware as a service vision has been taken up and proven by SFDC and NetSuite. All their good ideas came out of that those years in the 90's plus their original intent w/ Unbreakable Linux to drive a Linux standard for the industry (which is necessary for the Grid computing story to become a reality). Everything outside of this is just marketing crap meant to give them time to figure out how to make the most money possible while they figure out how to get their mediocre applications technology to work. Good for them! For a company that used to be a real innovator, they have really become another Microsoft and that sucks for everyone.
Posted by Figuyro (1 comment )
Link Flag
Red Hat's response
Thought it would be interesting to read
<a class="jive-link-external" href="http://www.redhat.com/promo/unfakeable/" target="_newWindow">http://www.redhat.com/promo/unfakeable/</a>
There are more questions and answers, I only grabbed a few.

~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-
Q: Does Oracle's announcement include support for the Red Hat Application Stack, JBoss, Hibernate, Red Hat GFS, Red Hat Cluster Suite, and Red Hat Directory Server?

A: No. Oracle does not support any of these leading open source products.

~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-
Q: Oracle says their Linux support includes the same software compatibility and ISV certifications of Red Hat Enterprise Linux. Is this true?

A: No. Oracle has stated they will make changes to the code independently of Red Hat. These changes will not be tested during Red Hat's software testing and certification process, and may cause unexpected behavior. Hence Red Hat software certifications are invalidated.


~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-
Q: Does Red Hat allow you to tailor your support level to your workload?

A: Yes. Many customers match their Red Hat Enterprise Linux subscription level to their application SLA requirements. For example, customers may choose a Basic subscription for non-mission critical file and print servers, while selecting Premium subscriptions for database servers. Oracle does not allow this flexibility - their support policy reads: "If acquiring Enterprise Linux Premier Support, all of your Oracle supported systems must be supported with Enterprise Linux Premier Support."


~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-

IDEA FOR THE CONSPIRACY THEORISTS: Maybe Oracle is trying to align themselves with Linux pushing it's "indestructability" and other claims PLANNING on making it nearly impossible to maintain the quality Linux is able to achive FOR THE SOLE PURPOSE of then pointing fingers at Linux and saying "you lied" and "you suck" and otherwise spread FUD that people may listen to in order to tarnish Linxu's good name?! Just an idea.
Posted by dragonbite (452 comments )
Reply Link Flag
GPL bites back :-)
how many people are using linux because it runs oracle?

Applications cause OS adoption and not the other way.

If I buy OS and database from oracle I will not get into blame games between vendors blaming each other.

There is a lot of value in getting a entire system from a single vendor.

Like buying sun solaris servers it's nice to have hardware and software supported by the same company ...

I love the effect of open source on todays business.

not a bright future for Redhat, never was ...

centos, oracle linux, solaris brandz ... all chewing out of their existing/future revenue.
and they are redhat compatible ...
Posted by zolyfarkas (20 comments )
Link Flag
Hmmm
Are they to stupid to develop their own Linux version and give support? Oh wait a minute did not Microsft do the same? Steal software?
Posted by Ted Miller (305 comments )
Reply Link Flag
WTF?
Do you have a point?
Posted by Mister Winky (301 comments )
Link Flag
Another Baseless comment
Wow - you win! Only 8 comments before a pointless off topic MS comment was thrown in. Must be a slow day for you.
Posted by Shakingmy head (48 comments )
Link Flag
Re: Hmmm
I wouldn't say they're "stealing software". There are other
versions of Linux that do the same thing Oracle is considering;
that is producing a version from the publicly available RH
sources. Centos is one that comes to mind for doing the same
thing.

Competition makes the world go around, but I think they
(Oracle) should have had a product ready, or very far along
before they announced something like this publicly, for obvious
reasons.

Charles R. Whealton
Charles Whealton @ pleasedontspam.com
Posted by chuck_whealton (521 comments )
Link Flag
Too many cooks
Aren't there enough linux distributions available as it is? Incompatability between distributions is a problem that appears will only get worse now. I do not approve of Oracle's tactics.
Posted by Seaspray0 (9714 comments )
Reply Link Flag
As Microsoft
laughs all the way to the bank. Exactly how many are there...300+?

Same problem with UNIX for years, SUN, IBM, HP, Digital....etc. Then you have SCO as well....somewhere in between UNIX and Linux.

I find it ironic that any Linux distro that is going to make it big in the buisness world is going to have to ditch its "openess" the very thing that Linux is about.
Posted by Lindy01 (443 comments )
Link Flag
The O/S Brains Trust
Look at Red Hat's track record.

They have become the "Operating System Brains Trust" for the biggest movers of Computing Iron.

They provide an important "leveller/equaliser/normaliser" for companies like IBM, HP, DELL - and many others. They provide O/S Software standards by which customers can insulate themselves from a lock-in to any individual Big Iron Maker's proprietary ambitions.

I think that Oracle has missed the point - altogether. Oracle does not make Big Iron.

SO - why is Oracle acting in a hostile manner towards Red Hat?

Maybe the JBOSS acquisition is the provoking trigger? Might there be any other reasons?

I think that Red Hat Linux, combined with - (so many independent OSF projects)+ (the strategies of the Big Iron companies) - present a vast landscape that will threaten any company with "I want it all proprietary hegemony" on its agenda.

Maybe Oracle, like Don Quixote de la Mancha, is tilting at windmills - and - Red Hat happens right now to look like one of the windmills.
Posted by sughyosha (21 comments )
Reply Link Flag
The Linux Application
Oracle is about to sell the next generation of Linux distributions. Those that are not sold for Linux but sold for the applications that run on top of the OS. This is not just a shot at Red Hat, but also Microsoft.

Buy a copy of Oracle 12.0 when it launches and the DVD will include everything you need to install the OS and application on a bare-bones server. Oracle is pledging to support that product when they start shipping it by providing support for an otherwise unsupported version of Red Hat's Linux (Fedora).

This is not Oracle selling RHEL and providing support. It is Oracle selling Oracle Linux based on Fedora (which is based on RHEL) and providing support for that product.

You will see some other major application developers follow this example, and it is building business on support for the software rather than sales of the software.
Posted by zaznet (1138 comments )
Reply Link Flag
Oracle needs a clue
Oracle - the most overhyped, overpriced POS on the market, was great in the days of the mainframe. In the 21st century, anyone who wants to pursue Linux and open source,would need rocks in their collective heads to get into bed with Oracle rather than, say, mySQL. Mercenary Oracle wants to support a free operating system so that they can absorb the budget previously allocated for servers for themselves. Greed and nothing else. Oracle is the antithesis of everything that open source stands for.
Posted by gggg sssss (2285 comments )
Reply Link Flag
Re: Oracle neeeds a clue
I wouldn't say that people going with Oracle on Linux over
mySQL have "rocks in their heads".

Oracle has a lot of advanced components including RAC that
Linux users might want, or need, to make use of.

Is mySQL there yet? Does mySQL have dataguarding?

I'll be the first to admit that Oracle has a very high priced
product. If an organization can make use of mySQL or Ingres
(now open sourced), then they should - no question there.

In the end, Oracle's RDBMS is by no means a POS...

Charles R. Whealton
Charles Whealton @ pleasedontspam.com
Posted by chuck_whealton (521 comments )
Link Flag
Oracle did prove one thing.
That open source is a very bad business model for anyone investing in it. Red Hats shares just plummeted by 26% since investors realized duh any competitor could just create a clone, the source code is right there. If you still have doubts just refer to the financial performance of companies like Oracle and Microsoft Vs that of Sun and Red Hat.
Posted by FutureGuy (742 comments )
Reply Link Flag
You are right about that
Traditional Open Source, that is GPL like Open Source, is a total looser as a business model goes. It is not a business model at all in fact.
It is just a rouge for the VCs to get software engineers to work for free, NOT EVEN Minimum Wage,
but for Free!
and then take their hard work and pump $20Mill in marketing dollars and then either sell the resulting company to one of their other portfolio companies or take it public and dump the shares on the public.
Meanwhile the software engineers that worked to develop that software for FREE, aka Slave Labor, get $0.00 for their hard work while the VCs and Investment Bankers make a killing.
And of course then they get their buddies in Big Media hype Open Source being good when it is hardly that.
Dont take me wrong, proprietary software model is even worst that GPL like Open Source.
What is needed is a new Open Source model where the software is given away for free to the market and source code too while the developers retain their Intellectual property over the work that they created and are compensated for that and not treated as Slave Labor.
Posted by caudio_roma (57 comments )
Link Flag
I don't understand
There are clones of RedHat Enterprise since version 3, the first one. And RedHat is still doing well.And those clones are quite ok, and much cheaper than Oracle (free). Really, the business model really works.
Posted by orfeu_niko (104 comments )
Link Flag
yes and no
Anyone can redistribute linux, but can they match the support, and stability that the bigger players already have?

Not very likely, even within a large corporation like Oracle.

Open Source is the main driver of innovation today. MS is totally irrelevant, regardless of the value of their stock.

More and more people and corporations are dumping outdated giants like Oracle and MS, hence all the attacks from them, but they will never match the agility and innovation of open source.

There are many millionaires and even billionaires that got rich through open source. Even on the other end, a developer can make an excellent living writing open source code.

Open Source, in some form, is the future. Not outdated models used by companies that really are failures in terms of everything important(ie not money).
Posted by qwerty75 (1164 comments )
Link Flag
stock price
MS stock has been stagnant for years. And at best will only maintain its lackluster performance over then next 5 years.
Posted by qwerty75 (1164 comments )
Link Flag
Re: Oracle did prove one thing.
Yea, you got that right.

Unfortunately, if investors didn't realize it was that easy to begin
with, they probably shouldn't have invested in RH or any other
open source company.

I'd agree that open source probably isn't the greatest business
model for a company; at least not at this time. In the end, I
think this was just a normal knee-jerk market reaction. The
same trash they do with any sector whenever they get the
chance.

Charles R. Whealton
Charles Whealton @ pleasedontspam.com
Posted by chuck_whealton (521 comments )
Link Flag
Open Source if new
Compared to the Capital Business Model (I own and I sell or I perform and you pay) Open Source is the new kid(model) on the block. This is a test it is going through as to its validity in the business world.

For Oracle it will be interesting to see how well they adapt to the different way of thinking with Open Source. Where the biggest purse doesn't mean as much as activity within the community. Hope they know how to play nice!

I'm sure Microsoft IS going to watch closely to see whether the move is valid, what works and what doesn't work when merging with Open Source.
Posted by dragonbite (452 comments )
Link Flag
Redhat needs to prove cred too
Personally I think the fact that some Open Source business was stolen from Redhat is no big surprise. I've blogged about the patent remifications of this on my blog :

kevinclosson.wordpress.com
Posted by kevinclosson (14 comments )
Reply Link Flag
Linux is Feeling the Heat of a Capitalist World
This is very enjoyable to watch. Just as many predicted Linux would inevitably run up against legitimate software patents. Moreover, it would also become bifurcated as much as its cousin UNIX (or hijacked clone as some view it). The only good out of all of this is that it's caused Microsoft to become non-complacent and begin to offer much needd re-vitalized and lean (as opposed to bloated) "Live" software.
Posted by WJeansonne (480 comments )
Reply Link Flag
 

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