The Red Monk web site gives some viewpoints on whether Oracle is suitable for Linux market. The author traces the history by saying that Oracle entered the Linux market by proxy back in October 2006. But instead of creating their own unique distribution, or to tab an existing volume distribution they chose to fork Red Hat’s Enterprise Linux (RHEL) offering. He also says that in the end of March 2007, Oracle announced a customer list for their less popular Linux services.

To boost the Linux offering, Oracle started a distribution from scratch, which was not a good idea because the effort required was not justified for the probable returns. The author compares the Red Hat potential with other competitors like Ubuntu and Debian. But he says, based on the package repository numbers alone, it’s difficult to assume that the extended Debian ecosystem including Ubuntu leaves behind higher profile commercial supplier. So, the commercial community with commercial support that writes to Red Hat outweighs the Debian community.

This commercial community is most interesting for a vendor like Oracle, as they tend to like to sell software rather than give it away. So, Oracle’s interests in the largest addressable commercial Linux community, and Red Hat’s leadership position in the same community, will prove fruitful. The author based on the above assumptions, concludes that Oracle would acquire Red Hat. But he points out that it is open source. Thus it was that Oracle entered into the Linux market at the cost of some bit scraping (for trademark purposes), hiring (qualified kernel engineers), and the usual operational costs (marketing, sales, and such). So, speculation abounds as far as Oracle’s longer-term motives with this move, but suffice it to say that they are well within their legal rights to do precisely what they did.

But the larger question of whether this is an astute business decision on their part remains. At their current pricing levels, it seems that this will be a financially rewarding standalone business in the near to mid-term if Red Hat continues to be a viable competitor. But perhaps that’s not the strategy, as it seems intended to merely be an additive component to other larger, enterprise sales. The less money that customers shell out for the operating system to Red Hat, one might assume, the more dollars available for the higher margin database products. This could also lead to a longer-term end of a Red Hat acquisition. If Oracle can materially impact Red Hat’s business, it may be in a position to acquire the company at a significant discount, he says.

The author is not in favor of Oracle’s short-term motive. He says, the operating system business is yet another major technology area that they will be required to invest in and support longer term. It should be non-trivial but non-excessive returns in the financial sense, and potentially negative returns in the PR sense. For Red Hat, the impact should be fairly negligible over the short to medium terms, as strategic operating systems decisions tend to have long buy cycles, but he thinks that Oracle’s entry into their market will have longer-term negative repercussions in margin, if nothing else. Also, he says, the customers are not better off. They’ll be transitioning from a relatively mature and well-understood Linux provider market to one in which they may have to make difficult choices.

He further supports his viewpoint by saying that the money Oracle will promise to save customers has to come from somewhere. He says, Oracle intends for the majority of that money to come from Red Hat’s sales pipeline, and is their prerogative. They could subsidize their efforts to poach Red Hat customers with the margins they make on their database business. But while Oracle’s apt to damage or at least inconvenience Red Hat, are also dependent on the longtime commercial Linux leader - a paradoxical and rather unenviable position that is likely to have implications at some point down the line, for the vendors and customers alike.

Over the long term, it’s possible that the Oracle/Red Hat dynamic could ultimately prove less divisive than a Linux Standard Base (LSB) unified Linux. But in the interim, Oracle’s likely to be lowering the oxygen content in the largest commercial Linux market in return for what the author believes are likely to be modest gains.