Perspective: Sending the penguins out with a hot foot

Let's clear something up right away: Larry Ellison's blockbuster announcement earlier this week wasn't meant to choke the life out of the open-source movement.

But as it concerns the fate of commercial open-source companies--well, that is an entirely different matter.

This rates as a stroke of cruel genius--right up there with Bill Gates' decision to gut his Borland nemesis Philippe Kahn in the early 1990s. Old-timers may recall that Borland once was a high-flier in the software business. But when Microsoft slashed prices on its Excel spreadsheet and Access database programs, Borland stumbled. The company failed to find a way to compete against a bigger, better financed rival that could afford to pursue a beggar-thy-neighbor strategy.

Hand it to Ellison for taking a page out of his arch-rival's playbook. Oracle's offer of free support for Red Hat Linux was designed to inflict maximum pain on Red Hat. So it did. One day after the announcement, Red Hat shares lost 24 percent of their value. After watching his stock take a tumble, Red Hat's CEO Matthew Szulik is in a bind. He has just absorbed the equivalent of a cyber-kick in the groin from a bigger, badder bully.

"This is capitalism, we are competing," Ellison later said during the question-and-answer session following his announcement. "We are trying to offer a better product at a lower price."

After years of being ridiculed for his ambitions, Ellison's grandiose plans for Oracle still appear grandiose--but hardly foolish anymore.

It's also a veiled threat to any open-source software vendor within earshot that Oracle's declaring a support price-war. Outside of an IBM, I don't know of any open-source supplier with the financial wherewithal to absorb that kind of profit margin punishment.

So what does Ellison want? The Red Hat news--which was accompanied by the announcement of Oracle's plans to distribute its own free clone of the operating system--won't do anything for the bottom line. Not anytime soon, that is. But just as with the billions of dollars spent on blockbuster acquisitions of PeopleSoft and Siebel Systems, this is all about one day upselling folks who may yet become new Oracle customers. ("We've got the operating system, we've got the middleware, we've got the database and we've got the applications.")

After years of being ridiculed for his ambitions, Ellison's grandiose plans for Oracle still appear grandiose--but hardly foolish anymore.

Ellison made his announcements during the closing keynote at the company's three-day Oracle OpenWorld conference in San Francisco. But this was not your usual Oracle OpenWorld. It also was Siebel World, and PeopleSoft World and J.D. Edwards World--all wrapped into one.

It also served as the stage for Ellison to build another monument--temporary though it may be--to himself. And you know what? After years of being mocked for a multibillion-dollar acquisition strategy that many dismissed as monumental folly to his ambition, Oracle's CEO may be having the last laugh.

Inveterate Ellison-bashers say it's too early to declare Ellison's acquisition strategy a success. But even his toughest critics acknowledge that the company's financial picture is brighter than it's been in years. To be sure, Oracle still has major issues to resolve. The company's hopes rest on its ballyhooed Fusion project. Oracle is working to meld various technologies acquired during its sundry acquisitions. If the Fusion migration falls short of the promise, thousands of customers may bolt for either Microsoft or SAP.

Oracle's management is aware of the stakes and maintains that Fusion is on track. If anything, they say, Microsoft and SAP have enough on their plate just keeping customers from bolting to Oracle.

Trash talk aside, there's little question Ellison is relishing the reversal of fortune. If Fusion works as advertised, Oracle could wind up dominating the software world this decade much as Microsoft dominated the last one.

With his old nemesis Bill Gates bowing out to become a full-time philanthropist, this is Ellison's moment on center stage. Now we'll see whether he's got what it takes to make the most of it.

Biography
Charles Cooper is CNET News.com's executive editor of commentary.

More Perspectives

[ejevo]

Kill Red Hat?

Wouldn't Oracle want to co-exist with Red Hat in this adventure? If Oracle kills off Red Hat, who picks up the pieces of the RH Linux code? I'd assume Oracle simply wants to share RH's lunch, not steal it and starve RH in the process.

[itworker--2008]

RE: Kill RedHat

Yep, they'd love to kill RH and replace everything with thier own distro, along with all the service contracts!!!

If Novell was on the ball 6-7years ago, there would have been a RH

[fred dunn]

Kill Microsoft Longhorn Server....Please....

If MS has as much "big brother" activation crap in Longhorn server then I hope that Oracle Kills them on it.
I'm not a big fan of Oracle but I have become less a fan of Microsoft since they integrated the EULA from hell in Vista.

[Broward Horne]

Linux Meme

Doesn't bode well for the Linux desktop future.

http://www.realmeme.com/roller/page/realmeme?entry=linux_meme

[unapersson]

maybe you're using the wrong keywords

http://www.google.com/trends?q=vista%2Cubuntu

looks like the Linux desktop future is growing just fine.

[qwerty75]

Much ado about nothing

Minus the temporary drop in stock prices, this is non-news.

Who in their right mind would switch to a 3rd party to support a certified enterprise product?

[kevinclosson]

Unbreakable Linux 2.0

("We've got the operating system, we've got the middleware, we've got the database and we've got the applications.")

...but they don't have the operating system. they have a copy of a copy..and not a copy of windows,AIX, Solaris.

...I invite readers to my blog where I discuss this and other topics such as the patent-related ramifications of this move by Oracle at

kevinclosson.wordpress.com

http://kevinclosson.wordpress.com/2006/10/27/unbreakable-linux-theft-of-patented-technology/