June 19, 2001 6:50 PM PDT
Red Hat to play in Oracle's arena
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"We'll have a pretty aggressive rollout," Red Hat Chief Executive Matthew Szulik said during a conference call with financial analysts Tuesday, after Red Hat's announcement of break-even quarterly earnings. The software, likely called Red Hat Database, will be announced Monday, Chief Financial Officer Kevin Thompson said in an interview.
"I think it's a good idea," said AMR Research analyst Peter Urban. For the software to catch on beyond smaller customers, though, Red Hat will have to offer round-the-clock support, he said. "At the enterprise level, they're not going to make a dent. But for small and midsized companies, they could do pretty well."
Szulik said the product will continue Red Hat's support for open-source software--code developed collaboratively by programmers who freely share the underlying source code, without many of the restrictions of proprietary software such as that from Microsoft or Oracle. The database also will fit into Red Hat's plan for selling subscriptions to the company's software management services, Szulik said.
The news might not be causing a panic at Oracle, the leading maker of database software, but a host of smaller open-source companies have reason to pay attention to the Red Hat plan. Red Hat is small fry compared with the giants of the computing industry, but it's a behemoth next to some start-ups.
Companies already working on open-source databases include Progress Software subsidiary NuSphere, Abriasoft, IBPhoenix and Great Bridge. These companies are building businesses atop existing open-source database projects such as MySQL, PostgreSQL and Interbase.
Chief Technology Officer Michael Tiemann said Red Hat has spent about six months evaluating its options on how to enter the database market.
The database product continues a trend, as Red Hat expands from operating system software into higher-level software. The company has branched out through acquisitions such as Akopia's e-commerce software and C2Net's version of the Apache Web server software.
In the longer term, open-source software could pose a serious threat to established companies. Research firm IDC said Linux accounted for 27 percent of new operating system shipments in 2000, second only to Microsoft's 41 percent, and has called Linux the "spoiler" to Microsoft's plans.
Linux has put pricing pressure on operating system companies such as Microsoft and Sun Microsystems. Red Hat's database, though, arrives at a time when pricing pressure already is intense as software makers scramble to maintain revenue, AMR's Urban said.
"The pricing has really come down" on database products, he said. "It kind of closes the door on the open-source guys."
Oracle is a longtime Linux supporter. It was among the early investors in Red Hat in 1999.
Tuesday's announcement came a few days before Red Hat plans to unveil full details. Red Hat executives aren't the only ones to have jumped the gun in describing the database project. The company's own news release lists database software among its open-source products.
