Category Archives: Investment & Stocks

My new hobby — learning about investment

Unbreakable, Unfakable, Cent-ual Linux

So of course, the financial news world is buzzing with Larry Ellison’s announcement that Oracle will be selling their own flavor of Linux: Unbreakable Linux, which they freely admit will be pretty much stolen from Red Hat and sold for about half the price at the entry level. The only real reason this has made the news at all is because investors more or less freaked out, dropping Red Hat stock by 25%. In response, Red Hat has started an “Unfakable” campaign to try to defend themselves.

Here is why investors are wrong, and Red Hat really has nothing to worry about.

First of all, whether Oracle’s goals are to support their customers running Oracle on Linux, or to undermine Red Hat, the fact remains that Oracle really hasn’t been a player in the OS support business. More importantly, they don’t have a lot of experience contributing and working with the Open Source community. This is an area where personal contacts (like those built up by Red Hat since their inception) are the most important commodity.

You can go to lots of other web sites and read all about that sort of stuff, though. Want to know the real reason why Oracle won’t be stealing all of Red Hat’s business? Well, Oracle plans on taking Red Hat Enterprise Linux, stripping out all the logos (which is what Red Hat uses to enforce their licensing), and sell it as a renamed product, for less money.

But, here’s the interesting part. You can get the same exact thing for free already! The CentOS project exactly fits that description. They even provide all of Red Hat’s latest updates and security fixes, usually within hours of Red Hat releasing them. And yet, Red Hat is still around, despite the fact that this lower-cost competitor has been around for years. This shows that cost alone isn’t enough for customers to leave Red Hat, which is the critical hinge of Oracle’s strategy. Let’s not mention the not-very-well-thought-out logic that companies willing to pay for Oracle’s database software (which isn’t cheap) are not going to compromise on their Linux support just because of a few hundred dollar price savings.

Further, there are nothing but unknowns associated with switching to Oracle’s “Unbreakable” Linux. For example, they don’t support the full gamut of Red Hat products, like JBoss, GFS, or Directory Server. Companies requiring this functionality are out of luck, and would no longer have the option of even using them in the future. More importantly, given Oracle’s uncertainty with its Linux strategy in the past, who knows how long it’s going to be until they just scrap the whole product line, leaving their Linux customers who-knows-where? The smart CTO will stay away from this product offering.

So what does this news really mean? First, Larry Ellison is still unpredictable. Second, he seems to have some sort of grudge against Red Hat. And last, with their stock dropping 25% for no real reason, this is a good time to pick up some Red Hat options :)