Oracle-Redhat controversy is just ugly capitalism and it may not be the end of Redhat

Few days back Oracle CEO Larry Ellison announced in Oracleworld that the company will offer support to Redhat Enterprise Linux for half the cost of Redhat’s offering. This sent shockwaves across the techbiz community and Redhat’s shares went tumbling down 30% (the shares had recovered a little bit since then). Pundits were busy wondering if this is the end of Redhat and whether it can fight back. Some of the media outlets, who owe their existence to companies creating proprietary software, were happily claiming that this event has exposed the inherent limitation of open source licenses. This claim is plain rubbish. This event has only exposed the ugly side of capitalism and it has nothing to do with open source or its licenses.

Letz go back in history and try to understand the issue in its perspective. Oracle, one of Redhat’s partners, wanted to buy Redhat and it was expensive for them to buy. Redhat acquired JBoss, the open source middleware app, few months back and it didn’t sit well with Oracle. This started the tussle between the two companies. Oracle has been “threatening” Redhat for sometime now and it has affected Redhat’s stocks in the recent months. Knowing the gameplan Oracle had used with Peoplesoft, it is quite possible to say that Oracle is trying to “hit” Redhat and make it an easy acquisition target. Now, everything depends on how Redhat fights back.

This is not going to be a cakewalk for Oracle. Oracle has to depend on Redhat for releasing the updates. I am pretty sure that Redhat will make it very difficult for Oracle, to offer security updates. Also it is going to be very difficult to convince enterprise customers that Oracle can offer the same level of support and updates like Redhat. Enterprises will prefer to get the support from the company that “develops” the Operating System than a third party (even if the third party is Oracle). Oracle might be able to get, few customers from Redhat, who are more worried about their budget than anything else but it is going to require a huge effort from the Oracle side to succeed in their efforts. If it is easy to get customers from Redhat by cutting the prices, many other companies could have used the same strategy long back. In fact, CentOS is freely giving out the Redhat software for quite sometime now. They are supporting their version with updates immediately after Redhat releases its own updates. If price is the only criteria, some other open source companies could have adopted the CentOS strategy and made the money out of it. Enterprise customers need more than just price cuts. They need reliability and certification from a trusted company (read original developers). I agree that Oracle is more stable than Redhat. However, Oracle cannot offer the same level of confidence (certification) to the customers, as Redhat, because they are not the actual developers of Redhat Linux. The enterprises will be more inclined to get the software certified by Redhat itself than any other third party. Oracle is not going to be hugely successful in weaning away the Redhat customers. This definitely is not the end of Redhat. But it is a big hit and Redhat needs to shift gears to make a comeback. We have to wait and see how Redhat is going to put together a strategy to offset this hit.

The capitalism involved in this controversy (read Larry Ellison’s own words) would have been better if Oracle had released its own Linux version with the superior support it can offer. They could have used their resources to put together a distribution, or even better, they could have bought a company that offers its own distribution. This act of Oracle is just ugly, cheap capitalism and it has nothing to do with the nature of open source licenses.