Oracle Corp wants to steal Red Hat Inc’s support business from under it, yesterday saying it will distribute and support Red Hat Linux at half the price charged by Red Hat.
The announcement puts to a rest rumors that the company would bring out its own Linux distribution. It will not. Rather, it will distribute Red Hat’s version, and try to take Red Hat’s support customers.
The news made Red Hat’s share price take another rapid trip south after the market’s closed yesterday. The company, which is a long-time Oracle partner, lost 16% of its market value in after-market trading.
In his typically ruthless style, a chuckling Oracle chief executive Larry Ellison pulled no punches when he announced the move at the company’s OracleWorld user show in San Francisco.
If you are a Red Hat Linux support customer you can now very easily switch from Red Hat support to Oracle support, Ellison said, receiving a round of applause. And our support costs way less than half of what Red Hat charges.
Essentially, the company is going to base its Linux support on the Red Hat distro, undercut Red Hat on pricing, and back-port all the bug fixes in the new Red Hat distro to previous versions.
If a customer has a problem with the Linux kernel — there’s a bug — and the Linux vendor fixes the bug, quite often that bug is not fixed in the version of Linux the customer is running, Ellison said. Instead it is fixed in a future version of Linux that’s about to come out… If you want to get the bug fix you’ve got to upgrade from Linux version X to Linux version Y.
Oracle, he said, will offer these bug fixes, so users don’t have to upgrade their operating system just to fix the bugs. The new services are being rolled out under the company’s four-year-old Unbreakable Linux banner.
We’re taking the Red Hat source code, we’re pulling it into our source code control systems, we’re removing trademarks and copyrighted images from the source code, we’re merging in Oracle’s bug fixes, we’re compiling the code, Edward Screven, Oracle’s chief corporate architect, said. We’ll do this for every single version of software that Red Hat releases.
The installable images and binaries will be available for free download by anybody from oracle.com/linux.
Prices will start at $99 a year for basic support, which means access to updates through the Oracle site. Adding enterprise support bumps the price up to $399 per two-processor system or $999 per server with more than two processors.
To get the back-ported bug fixes as part of the support package, you have to upgrade to the top-tier $1,199 (two-processor) or $1,999 (unlimited processor) support packages.
Ellison said that these prices are at least half the price of equivalent Red Hat support packages. The company will also cut these prices in half as a promotion for existing Oracle customers until January 2007.
As part of the price, buyers will get indemnification against intellectual property claims from the likes of SCO Group Inc, which is suing IBM and others over alleged code misappropriation.
Ellison invoked the SCO bogeyman, and claimed, incorrectly, that currently, Linux vendors don’t provide that indemnification.
Rumors have been circulating for months that Oracle would get more deeply into the Linux space, possibly by bringing out its own distribution.
Back in April, Ellison told the Financial Times: I’d like to have a complete stack… We’re missing an operating system. You could argue that it makes a lot of sense for us to look at distributing and supporting Linux.
In a sense, Oracle is bringing our its own distro. The difference is that it will let Red Hat do the work of actually releasing the code, while its own engineers just concentrate on removing trademarks and back-porting the bug fixes.
It’s a cheeky move, and no mistake, all that remains to be seen is how deeply the company can cut into Red Hat’s support revenues.