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Will Red Hat Survive? 158

Posted by Zonk
from the hold-on-to-your-butts dept.
An anonymous reader writes "Red Herring has an in-depth analysis interviewing industry experts on what the future of Linux distributor Red Hat will likely be now that Oracle is offering cheaper support and services essentially identical to Red Hat Linux. Will Oracle purchase Red Hat? Or is it not yet too late?" From the article: "Mr. Dargo countered that Oracle's move indicated a lack of understanding of the value that Red Hat's support and service provide. But he noted that Red Hat could be vulnerable if Oracle manages to provide better service. 'If the strategy at Oracle works out, Red Hat is going to face some serious issues, but I don't think it is going to work out,' he said. 'There are lots of opportunities for Red Hat to do some aggressive and creative things to turn around.'"
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Will Red Hat Survive?

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  • Competition (Score:2, Insightful)

    by Jastiv (958017) on Saturday October 28, 2006 @04:47AM (#16620862) Homepage
    I wish the beat your competition into the ground monopolist attitude that some people have would just die. This is the open source revolution here. We don't need to have one guy win while the other guy loses. Red hat does plenty of other things besides working with Oracle. Its not about making the other guy lose, its about you winning. If there is no market, then you all lose.
  • They Don't Get It (Score:5, Insightful)

    by capt.Hij (318203) on Saturday October 28, 2006 @04:47AM (#16620864) Homepage Journal
    From the article:
    Enterprise Applications Consulting analyst Joshua Greenbaum said Oracle's gambit puts Red Hat in a "very dangerous position" because it doesn't own intellectual property and is just offering services.
    First, Oracle is not offering the same thing as Redhat. They do not have the same kind of support. Second, Redhat owns something better than intellectual property. They have kernel and application programers. They have the people who can offer customized support and insight that few can match. Third, Redhat understands and cares about open source. Despite what a few whiners around here say, Redhat supports the community and takes on people who attack it. They have built tremendous good will. I can't see Larry going after people who attack the GPL. Larry only cares about Larry and Japanese statuary.
  • by c0l0 (826165) on Saturday October 28, 2006 @04:52AM (#16620888) Homepage
    I've never been an Oracle customer myself, but I know some people who heave been - and how content, or rather, how NOT content - they were with the service of the company. Red Hat, on the other hand, was awarded with the first place in some customer-contentment-survey recently cited by German IT-newsmag c't (where Oracle came in at around place 40 or so). So I suppose that Red Hat offers much better service, and will do so even more on a product THEY actually make themselves, compared with something Oracle basically just relables.

    It could turn out a problem, however, that uneducated "decision-makers" (how I loathe that word) who don't give a shit about what their more tech-savvy and competent advisers say, and just go for "Unbreakable Linux", because it's cheaper and supported by a big and well known player of IT. Who has ever been fired for buying Micr..., uhm, Oracle?
  • Re:Prices (Score:5, Insightful)

    by chabotc (22496) <chabotc AT gmail DOT com> on Saturday October 28, 2006 @05:01AM (#16620910) Homepage
    > may the best distro win.

    Umm in both cases the 'distro' is Redhat Enterprise ...

    if oracle's distro wins to much, they will have killed their 'upstream' distro provider, and who's patches and fixes and developments can they then "follow, releasing our updates only a day later".

    Anyhow, it is a very healthy vote of confidence in RHES, it seems to become the 'new' LSB .. But lets hope oracle is smart enough not to kill their supplier :-)
  • Re:Prices (Score:5, Insightful)

    by jkrise (535370) on Saturday October 28, 2006 @05:09AM (#16620926) Journal
    "may the best distro win."

    RedHat is much more than yet another distro... though it's the biggest distro by a distance. And a database is not the only thing that a distro is used for....

    How can one trust Oracle to look after businesses developed and serviced by RedHat - that has NOTHING to do with databases at all? Or even middleware / ERP?
  • by BeeBeard (999187) on Saturday October 28, 2006 @06:11AM (#16621094)
    If Slashdot is going to link to articles that predict "The Death of..." every time a prominent tech company takes a hit in the stock market, then its editors are about to be as 100 times as busy! Red Hat (two words ;) has lucrative multi-year deals with a number of big players (including, ironically enough, Oracle..), and they are savvy enough to use that time to circle the wagons and modify their business model to deal with this new competition. If they have to lower prices--fine. If they have to fire some people--fine. If, as you mentioned, they have to leverage the IP they have already invested into their products over the past decade or so--fine. What they won't do, as one of the Triangle's most important companies, is run in lieu of adapting.

    I guess what few people seem to be talking about is "This is what Red Hat signed up for." When you base your solvency as a company on open source-based software, then this is one of the risks you take. Somebody else might just offer a very similar product at a very different price, using much of your hard work in the process. And that's OK, it comes with the territory. The problem, of course, is that the "somebody" is Oracle, who have the financial resources to bury Red Hat using their own product if they felt so inclined. In the same way in which Microsoft flooded the console market with cheap X-Boxes, taking a hit on each one, Oracle is more than capable of selling their services packages for $1 a pop if they really wanted to. Why isn't that happening yet? Because as I said, many of the big name companies that are using Linux-based solutions already have long-term commitments to Red Hat. This isn't war yet, it is a company building its war machines in preparation for the time when those support contracts expire. In the meantime, Red Hat has all the time in the world to improve itself as a company and to convince those who already use their products and services to stay with Red Hat in the future as well.
  • by Captain Kirk (148843) on Saturday October 28, 2006 @06:18AM (#16621118) Homepage Journal
    Oracle and "cheap" in same sentence. What next? Microsoft and "gentle"? IBM and "modest"? Enron and "due diligence"?

    Seriously, Oracle is never going to be a cheap solution in any market. They claim to be an enterprise software vendor. They charge prices that allow them to provide enterprise solutions very profitably. Oracle clients do not care about the price because they run their business more profitably on Oracle software. In many comapnies, small projects are developed in bitty things like MS Access and then ported to Oracle when they have proven a good idea. Getting your app an Oracle back-end was seen as proof you did a great job when I was contracting at Vodafone for example.

    The very fact that they have the Oracle brand behind them means they can and will be the most expensive provider of enterprise level support of Linux.

    Unless Red Hat has some aspiration to be more expensive than Oracle, the arrival of Oracle in the market can only be good news as it will grow the overall marketplace.
  • I built LFS (Score:1, Insightful)

    by Anonymous Coward on Saturday October 28, 2006 @06:46AM (#16621206)
    A linux from scratch distro, how long does it take? Mine took about 2 months the first time I did it without understanding
    very much. Second time it took me a week. After that I built a source toolchain system.
    My point is that if Jaromil can single handedly put Dyne together, and I can single handedly put my own
    distro together **FROM SCRATCH**, why does a company as big as Oracle go and do something as
    weak as just hijack another distro. Can't they get their own ball to play with?
  • Re:Probably not (Score:3, Insightful)

    by ronanbear (924575) on Saturday October 28, 2006 @07:11AM (#16621312)
    Small niche? Red Hat is the market leading distro. Oracle represents another huge company which depends on and is compatible with RHEL. RHEL has spawned several important clones CentOS, Scientific Linux and now Unbreakable Linux.

    Unbreakable will most likely only compete with RHEL for Oracle customers. That's a profitable market for Red Hat though. What Oracle need to remember is that undercutting a Linux distro is a dangerous game because they can be undercut at any time. All it takes is someone selling good support for CentOS etc.

    This strengthens the position of RHEL within the enterprise Linux sector. Red Hats position as the standard distro to certify to and test for is becoming stronger and stronger.

  • by melonman (608440) on Saturday October 28, 2006 @07:15AM (#16621326) Journal
    Surely the bigger loser here is Novell. Oracle is competing with Red Hat for support of RHEL, but then Red Hat never had the monopoly in that market anyway: plenty of people used Red Hat without paying for AS-quality support. What this move does do is make the Red Hat flavour of Linux even more clearly the mainstream enterprise distribution. How well Red Hat will cope with competition from Oracle in offering support for that product remains to be seen, but I'd have thought that selling a non-Red Hat flavour of Linux to an IT department suddenly got a whole lot harder.
  • by Anonymous Coward on Saturday October 28, 2006 @07:18AM (#16621340)
    I don't think people here understand the magnitude of what is going on right now. Oracle does not own the full stack. They have a great database, they have a great ERP/CRM or whatever PeopleSoft really is. They have a terrible app server, and they have no operating system. By offering rebranded RedHat, they make it plausible that they will buy RedHat. Everybody has gotten this far. However, what people don't seem to realize is that by doing this they acquire both an OS and a good app server. They would own an entire software stack.

    Both Microsoft and IBM (owners of their own software stacks) can't afford to see this happen. Microsoft will not make a play on RedHat. Their desire is to see Linux growth stifled if not fully fail. Losing Red Hat in the market would be a good step, but not enough. I don't know what Microsoft's play is, or if they can even afford the loss in credibility on "opensource is bad for you" if they make one. IBM will make a play. My prediction (no direct knowledge) is that IBM purchases either Red Hat or Novell. Either move is a defensive one. The problem with either? If IBM purchases Red Hat, JBoss is dead. IBM has Geronimo and IBM has WebSphere, they don't need JBoss. Perhaps it's the other way and Geronimo would die and WebSphere would move to be a little more like JBoss under the covers, either way, you've lost a choice. Red Hat would continue albeit in a much different form.

    Here's the bad news. If Oracle buys Red Hat, and IBM buys Novell as a defensive move, IBM wouldn't continue Mono. They don't want .NET anything. Here's another bad thing, both the distribution mechanisms of SLES and RHEL will change. The only two real, commercial Linux distributions may have just become a lot harder to get your hands on... who will be there as an independent vendor not trying to sell you a whole software stack when all you want is an enterprise Linux distribution? Don't put your favorite distro here.... because now the difference between those and these new "enterprise" offerings is HUGE in CIO mindshare.

    I do believe that whichever one (if not both) IBM purchases, the open community whether it be Fedora or OpenSuSE would continue on. They'd probably get restructured to more closely resemble the Eclipse foundation, but there you'd have it. Oracle would keep theirs up for awhile to, because they'd need the innovation to come from the community and there'd be much less of a difference between the Enterprise and Community versions over time. ;)

    Something to chew on.
  • by Znork (31774) on Saturday October 28, 2006 @07:19AM (#16621342)
    One has to wonder at Mr. Greenbaums analysis. Red Hat is used to not owning exclusive IP and competing on a level playing field. Oracle isn't; it's whole operation is used to the protection of exclusivity. I fail to see any dangerous position.

    I wonder if Larry has really thought this through; offering Red Hats patches developed for Red Hats customers but two days later isnt a compelling sales argument so what will Oracle do when Oracles customers report bugs to Oracle? Report the bugs to Red Hat and hope they fix them? Or fix them themselves, and submit the patches upstream to Red Hat? Either their customers risk being left high and dry, or Oracle will be doing Red Hats work for them, just as much as the other way around.

    "I can't see Larry going after people who attack the GPL"

    But maybe we'll see Larry going after the GPL, once he realizes that Red Hat can freeload right back at him.
  • Re:I Didn't Get It (Score:3, Insightful)

    by Pharmboy (216950) on Saturday October 28, 2006 @07:53AM (#16621476) Journal
    I think RedHat made itself vulnerable a few years back when it basically changed its structure and dropped support for the small guy. We had a half dozen servers and had the inexpensive contracts for each server, about $40 a year or over $300 total, just for updates. If we wanted more support, we would simply pay for it as we needed it. I used their web services to manage servers and really liked their service. I would have paid more for the service, but not $250 to $800 per machine per year. Now I pay them exactly $0.

    Now I use Fedora only when needed (being phased out), and have moved my personal Linux boxen to SuSE. I have been trying out Debian and others as well. Since I cut my teeth on RedHat 4.x, and begin using it exclusively on servers since 6.1, they could have easily kept my business by being fair and easy to work with. I even PURCHASED RedHat, even though I could have downloaded it for free, and signed up for the paid updates as soon as they offered it.

    Now they have abandoned the small business, the desktop and a free enterprise distribution (which Fedora is NOT). In the short run, they might have made their shareholders happy, but in the long run, they have abandoned many of their customers who were customers BEFORE they were a public company. I don't wish them any harm (and not an Oracle fan), but it is hard for me to cry for them since they made their own problems. I still haven't settled on a single distribution for the servers, but I doubt they will change enough in time for me to switch back.
  • by Pharmboy (216950) on Saturday October 28, 2006 @09:47AM (#16622042) Journal
    I expanded on this below, so I won't rehash, and instead answer the main question:

    Would I ever go back to RedHat?

    It is very possible. Everyone makes mistakes, myself included. But I wouldn't go back until they changed their business model to something that is more friendly to small guys. I wouldn't even demand an apology, although one is certainly deserved. I am not a fanboy/anti-fanboy. I am a pragmatic guy that will use what I believe is the best option, be it RedHat, SuSE or even MS if they could get their act together (not holding my breath). I like the idea of "Free as in speech" software, but it is a preference, not a religion. It just makes my life easier.

    RedHat HAS done some very good things for the community. They have also done some very questionable things, and not just the business model change that abandoned all us small users. I don't consider them good or evil, just another company that I would prefer to not do business with at this time because of their past and current policies that alienate small users that want more than Fedora (I do NOT want a new version every 6 freaking months!!!!), and are willing to pay for it. Just not $800+ a year for updates.

    There are MANY thousands of people who feel exactly like I do, that RH screwed us over, took our money, changed their business, and left us high and dry. Not that it makes it any better, but MS does this every time they change their EULA or disables a feature. IBM is now the darling of the Linux community, yet 20 years ago it was the bastard. Companies change, and I would be a fool to hold a grudge against a corporation, since board members change all the time.

    So, can I forgive? Yes. Will I forget? Doubtful.
  • Re:If Redhat dies (Score:3, Insightful)

    by burnin1965 (535071) on Saturday October 28, 2006 @11:57AM (#16623194) Homepage

    What will Oracle rip^^^base its Unbreakable Linux on?


    More importantly where will businesses go to get their linux OS upon which to run Oracle?

    Yes I know, Oracle will provide the OS and that is the idea behind Oracle's Unbreakable Linux, but there is a problem that should be considered by anyone who is interested in replacing Red Hat support subscriptions with Oracle support subscriptions. The CEO of Oracle does not believe in supporting open source because Ellison fears that "if we could do this, other people could do this too" and Ellison believes that when it comes to open source "if it ever got good enough we'd just take the intellectual property".

    So you see there is no way the CEO of Oracle is going to allow any significant Oracle development to be placed in an open source product because then everyone would just take Oracle's intellectual property. linux as an open source product from Oracle is a dead end without Red Hat and any business that considers buying linux support from Oracle as apposed to an actual open source vendor like Red Hat either misunderstands the implications or has rocks in their head.

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