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Red Hat’s stock price was off 24% in yesterday's trading after the announcement that Oracle was planning to provide open-source software for big businesses. But to make that happen, it plans to steamroll right through Linux open-source vendor Red Hat on its way. Oracle starts with Red Hat Linux, removes Red Hat trademarks, and then adds Linux bug fixes. Oracle has revealed that customers are rapidly embracing its Unbreakable Linux program, the company's global program for enterprises running Linux. "We believe that true enterprise quality support for Linux, at a lower cost, is something that our customers want," said Oracle President Charles Phillips.

Oracle is offering its Unbreakable Linux program for substantially less than Red Hat currently charges for its best support. "We believe that better support and lower support prices will speed the adoption of Linux, and we are working closely with our partners to make that happen," said Oracle CEO Larry Ellison. "Intel is a development partner. Dell and HP are resellers and support partners. Many others are signed up to help us move Linux up to mission critical status in the data center."

"Oracle's Unbreakable Linux program is available to all Linux users for as low as USD 99 per system per year," said Oracle President Charles Phillips. "You do not have to be a user of Oracle software to qualify. This is all about broadening the success of Linux. To get Oracle support for Red Hat Linux all you have to do is point your Red Hat server to the Oracle network. The switch takes less than a minute."

"We think it's important not to fragment the market," said Oracle's Chief Corporate Architect Edward Screven. "We will maintain compatibility with Red Hat Linux. Every time Red Hat distributes a new version we will resynchronise with their code. All we add are bug fixes, which are immediately available to Red Hat and the rest of the community. We have years of Linux engineering experience. Several Oracle employees are Linux mainline maintainers."

Can You Call Oracle’s Move to Strip Red-Hat Specific Trademarks Uncouth

Commenting on the move, Red Hat spokesperson Leigh Day said, "The opportunity for open source just got bigger". She continued, "Oracle's announcement further validates open source and Red Hat's technical leadership. We will continue to optimise Red Hat Enterprise Linux for Oracle and compete on value and innovation." Red Hat has long been the flag bearer for enterprise Linux, and much to its credit, it has always made its binaries available for free. So while Oracle ripping off those binaries and stripping out the Red Hat-specific trademarks might seem uncouth, it is not unheard of in the open source world, Leigh added.

Others debated whether the move might hurt or hinder any future Oracle effort to acquire Red Hat, which was one of the possibilities discussed leading up to this week. For its part, Red Hat has downplayed the impact of Oracle's Linux play, indicating an Oracle Linux will be new, will not be certified or supported the way Red Hat Enterprise Linux is, and may not necessarily be in demand.

"It is not clear that anyone really wants this third distribution in the enterprise market," Red Hat JBoss Division Manager Marc Fleury wrote in his blog prior to the Oracle Linux announcement.

The move makes Oracle a bona fide rival to Red Hat, Novell and Microsoft, according to Al Gillen, an OS software analyst at research firm IDC.

"This does put Oracle into the Linux distribution business," Gillen said. "It will likely have a small impact on the Linux market over the first 12 months, since the most likely customers up front will be existing Oracle customers using Oracle database software on Linux or Oracle application software on Linux."

Oracle's program isn't like other Red Hat clones, such as CentOS and rPath, because Oracle's Unbreakable Linux 2.0 will be a commercially supported Linux distribution. "You won't see anybody getting an rPath distribution for general use," Gillen said. "By comparison, you can potentially get a copy of Oracle Linux for general-purpose use."

Others dismissed Oracle's Linux announcement as a swipe at Red Hat for acquiring middleware rival JBoss, or possibly an attempt to undermine Red Hat's stock price and prime it for a hostile takeover by Oracle.

But Oracle may have something else in mind besides killing Red Hat and irritating Microsoft, observers noted. Like many other application vendors caught in the crossfire of the virtualisation software craze, Oracle could be trying to gain control over how its applications are deployed and paid for in the virtual era. Red Hat's next Linux distribution will contain the Xen hypervisor.

"Internet Service Vendors (ISVs) need to control their application destiny as virtualisation accelerates. They have to control what OS components are installed with their application in the virtual container because of efficiency and supportability," said a high-tech venture capitalist. "ISVs need to control their own stack, and it becomes increasingly important as virtualisation comes to fruition."

The competitive dynamics are more acute for Oracle, since its two key competitors in the middleware market, Red Hat and Microsoft, own the operating system and will have virtualisation hypervisors in their respective platforms.

Oracle's moves could spur other ISVs, application vendors and even Original Equipment Manufacturers (OEMs) to build, bundle and support their own custom Linux derivatives with their applications, which would have a profound impact on the entire OS landscape, observers said.

Who Else Has Joined the Bandwagon?

The technology players that have lined up behind Oracle's Linux program are as follows:

• DELL
• Intel
• HP
• IBM
• Accenture
• AMD
• Bearing Point
• EMC
• BMC
• NetApp