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Server vendors show Red Hat that Oracle is boss

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Analysis Oracle's move to support the Linux operating system has called more than Red Hat's business fundamentals into question. It has demanded that customers examine just how strong Red Hat's partner ties really are.

The likes of Dell, HP and IBM have enjoyed a very lucrative relationship with Red Hat, selling millions of servers to run RHEL (Red Hat Enterprise Linux). (Dell even invested in Red Hat.) Such profits, however, did little to stop the server makers from celebrating Oracle's advance into the Linux OS and support games.

"As a customer with first hand experience of Oracle's outstanding support organization, Dell will use Oracle to support Linux operating systems internally," said Michael Dell, the Chairman of Dell, in a statement, adding that customers can immediately pick up Oracle's Unbreakable Linux from his server store.

"HP welcomes the addition of Oracle's Unbreakable Linux program to the portfolio," said Mark Hurd, HP's chief and flavor of the month Chairman.

IBM didn't manage to plant a canned quotation in Sam Palmisano's mouth, but did pry open SVP Bill Zeitler's pie hole. "IBM shares Oracle's goal of making Linux a reliable, highly standard, cost effective platform for mission critical applications backed by world class support."

(Does Oracle not like Jonathan Schwartz's ponytail or did Solaris x86 have something to do with the Sun Microsystems snub?)

You can bet that such marketing material did not reach Oracle with ease.

All of the server vendors partner with a wide variety of companies, making yet another software tie-up commonplace. But it is unusual to see these vendors provide their top executives for an announcement that sent a key partner's share price down 25 per cent. Oracle's Linux revelation would have carried much less heft without the broad support from IBM, HP, Dell, NetApp, AMD and others.

This has to make you wonder what Red Hat has done to offend its partners.

"I'll bet Red Hat is plenty surprised by the endorsements," said Gabriel Consulting Group analyst Dan Olds. "I doubt they got a heads up.

"It seems like Red Hat has been a little bit - ok, a lot - arrogant in years past, and this could be their comeuppance."

At the same time, Olds chalks up the server vendor support to good, old fashioned business sense. The server makers have made more money with Oracle over the years and know that Larry's shop carries more weight in the industry.

"They don't and can't care about Red Hat's feelings," Olds said. "Oracle has much more market power in the enterprise than Red Hat, and this program is evidence of Oracle flexing their market muscles."

The broad support also has to make you wonder about IBM, HP and Dell's long-standing pledges to the good of Linux, if Oracle is indeed going to fork the operating system, as Red Hat claims. The hardware makers have gone pretty far with their bidding for Oracle by giving the go ahead for a major open source disruption.

Ultimately, the server vendors' position with the open source community should be safe because Oracle will fail with this Linux play. "Customers want branded bits, not cheap bits," one industry insider told us. "Can you imagine Red Hat showing up with a half-price Oracle database - the same code just stripped of copyright legends? Give me a break."

What we've learned though is that the hardware makers' relationship with Red Hat is not as tight as they'd have you believe. And their commitment to Linux purity is not as deep as claimed.

No one knows this now better than Red Hat, and we're curious how the software maker will react. ®

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