CTO Blog
Larry Ellison the ‘bad boy’ of the industry as he likes to bill himself, but probably more correctly the industry maverick for change, enjoyed himself hugely in giving his keynote at Oracle Open World. His announcement that Oracle would support the RedHat distribution of Linux by offering maintenance support and further development of kernel features in full accordance with the Linux community rules went down very well with his audience. They could see the way to take full advantage of a Linux based OS without the worry of the quality or expense of Linux maintenance.
On the other hand as one of the audience questioned, a Goldman Sachs analyst, asked; ‘is the destruction of RedHat an unintended side effect?’. Well certainly RedHat shares went down almost 25% in the following 24 hours, and certainly the committed Open Source community for whom the principle of Open Source is sacred were shocked, but for many including analysts it was not a big surprise.
Oracle has made no secret of its increasing interest in how to use Open Source together with Open Standards to allow ‘add ons’ that will broaden the appeal of its core products. It has acquired several Open Source providers, notable names including Sleepy Cat and Berkeley; whilst in their core market of Databases they have expressed interest in acquiring MySQL, as well as actually acquiring Innobase an open source contributor to the MySQL distribution. They have also added to the Linux kernel with contributions that support Oracle cluster file system, and proven that they are good ‘Linux’ citizens by doing this in accordance with all the principles.
What is interesting is that Oracle has now demonstrated something very new; it’s not necessary to buy the owner of an Open Source distribution, after all the code is ‘free’, therefore there is no intellectual property to purchase as in a conventional software vendor purchase, but you can make money from offering maintenance on the their distribution. This breaks the unwritten rules of Open Source and must cause IBM as the existing biggest champion of supporting Open Source to rethink their strategy.
In one shot Oracle has just;
a) figured out how to make money out of other people’s efforts to build software;
b) just impacted the pricing for software maintenance by cutting the currently very expensive maintenance rates for Linux by 50 to 60%;
c) placed itself squarely in the game of developing Open Source software and
d) deflected open source community criticism around this introducing code forks by offering synchronisation with new RedHat distributions, assuming RedHat stays in business to be able to introduce new upgrade versions.
So what does this mean? Well the analysts are still out trying to figure it out from a pure commercial sense, but what about you? What do you feel in a personal sense? Whilst this may be a legal move, is it in the spirit, on the other hand will it mean that open source will now grow faster as full commercial maintenance is available? There are so many questions here and in the end it will all depend on the reaction of users.
About the author
Capgemini Global Chief Technology Officer, Andy is a member of the Capgemini Group management board and advises on all aspects of technology-driven market changes, together with being a member of the Policy Board for the British Computer Society. Andy is the author of many white papers, and the co-author three books that have charted the current changes in technology and its use by business starting in 2006 with ‘Mashup Corporations’ detailing how enterprises could make use of Web 2.0 to develop new go to market propositions. This was followed in May 2008 by Mesh Collaboration focussing on the impact of Web 2.0 on the enterprise front office and its working techniques, then in 2010 “Enterprise Cloud Computing: A Strategy Guide for Business and Technology leaders” co-authored with well-known academic Peter Fingar and one of the leading authorities on business process, John Pyke. The book describes the wider business implications of Cloud Computing with the promise of on-demand business innovation. It looks at how businesses trade differently on the web using mash-ups but also the challenges in managing more frequent change through social tools, and what happens when cloud comes into play in fully fledged operations. Andy was voted one of the top 25 most influential CTOs in the world in 2009 by InfoWorld and is grateful to readers of Computing Weekly who voted the Capgemini CTOblog the best Blog for Business Managers and CIOs each year for the last three years.
Providing customers with an OS, is a move that is consistent with Oracle’s strategy of offering a full stack of enterprise software solutions from OS through middware and databases to applications.
It can be seen as part of a wider industry trend where software companies anticipate a time when license revenue starts declining and services account for most of their income.
As to whether Oracle is acting as a good open source citizen, time will tell. In my opinion the key question here is whether Oracle’s goal is just to disrupt Red Hat’s business or to actually invest in further developing Red Hat Enterprise Linux (RHEL). If Oracle is going to seriously invest in RHEL development then I would say they are acting in the spirit of open source. The Linux community would stand to gain from this sort of competition.
like the comment on the test being if Oracle invests in Linux, that would seem to be the real test of the reason for their actions. A stronger Linux through Oracle direct involvement but with out the fork in the Linux code would indeed be a good move
andy
I think this is very “proof of the pudding” territory, as the comments above reflect.
As someone who has pondered the pros and cons of Linux for many years now (not so much as concept, which I wholehearted support, but more from a viable customer proposition perspective). The Microsoft debate aside, I’ve pondered over the merits of re-directing revenues from one UNIX vendor to another (e.g. RedHat).
I have long thought of the benefits being in commoditisation – i.e. the evolution of modular ‘black box’ solutions for firewalls, web servers or application-specific services. This seems to be an anticipate step from Oracle, having realised the difficulties in producing their own servers, to exploit Linux in this way i.e. to eventually have Oracle reap all the true value-add above the hardware layer.
Realistically the market will depend on 3 core factors here:
(a) will Oracle price this attractive (particularly on multi-core/virtualised/shared service platforms)?
(b) will Oracle embody the breadth of service to minimise/negate the need for OS-layer support costs?
(c) will sufficiently mature/trusted hardware vendor partners support this model?
In terms of the latter, my gut feel is this is not where the likes of IBM/Sun/HP will want to play (their merits tend towards the provision of flexible, agile IT platforms supporting Oracle as one of many possible services). Players such as Dell may develop some interesting responses here (particularly as one of the original RedHat investors!) but I am hopeful this provides an opportunity for the more ‘disruptive’ players, such as Egenera or Liquid Computing (or even Sun should they re-consider their true colours), to exploit their innovative natures.
… even more on the wild side – could we see a crack for a non-US player to squeeze in? Although I doubt it, I truly hope so!
good comment – its striking that the French have invested so heavily in open source apparently to reduce american dependance, and yet we do not have as yet a leading european player enjoying the benefits of this.
andy
Open source as philosophical position or open-source as a route to lower cost of ownership? If the pressure is maintained on support costs who actually cares? Sure there will be yank-bashers or even Frog-bashers who will take a different position but for the vast majority of customers and suppliers it is the value proposition and possibility for industrialization that matters.
I agree completely that open-source as a cost-reductive measure has been, and still is, a red herring and generally speaking a false economy.
This has been reflected by many people moving to Linux and then face broadly equivalent support costs. Those doing so to exploit lower-cost x86 hardware are now finding their original UNIX vendors supporting these anyway.
As for the industrialisation perspective … I think this will struggle with the same issues encountered when UNIX was seen as the platform for this. Nobody wants to see another Microsoft-style monopoly.
I also wanted to clarify that my comments were not intended to ‘bash’ the US success in this industry. I was more following on from an earlier post (http://www.capgemini.com/ctoblog/2006/07/winners_and_losers_no_real_cha.php) where I was proposing that we take this US-dominance too much as ‘a given’, and should strive to compete in real terms.
i have been interested to see what the industry analysts have made of this. initially it was ‘end of Open Source’ type reaction, now it seems to have calmed down to a more considered move that suggests small innovators on the edge in a specific area are not in much danger but get too big and main stream then you are risk from a large player doing an ‘oracle’.
andy