Oracle corporation is making direct threatening moves toward the open-source Linux market by targeting Red Hat. The fun just never ends, it seems.
RALEIGH, N.C. – One move by rival Oracle Corp. has turned Red Hat Inc. from a celebrated leader in open-source software to a fragile underdog.
Shares of Red Hat tumbled 24 percent Thursday on the news that Oracle will move aggressively onto Red Hat's turf by selling maintenance services for Red Hat products.
Oracle's brawn threatens an undersized Red Hat, which has benefited from a relative shortage of competition in thesector — until now.
"Red Hat needs a new business model fast," said Rob Enderle, principal analyst at the Enderle Group tech consulting firm. "Oracle's organization is vastly superior. They'll be providing a better product at a better price. Nobody can say right now whether Red Hat will even be able to survive."
Unlike Microsoft Corp.'s market-dominating Windows operating system, Raleigh-based Red Hat distributes the open-source Linux system for free. The company makes money by selling service and support.
Oracle CEO Larry Ellison announced Wednesday that his company will offer identical support services for Red Hat's products — at a roughly 50 percent discount.
"Oracle pretty much took Red Hat's entire business," Enderle said. "Of all the companies in software, Oracle's easily the scariest — they're just so aggressive."
Well, this complicates the picture for at least one Linux-based system. Red Hat is not the only fish in that pond, however.