With the current economic crisis showing no signs of abatement more and more companies are seeing theirstocks drop to dangerous levels making them ripe for acquisition attempts. One such company is Red Hat, the vendor of enterprise Linux software and the JBoss enterprise middleware products. Speculation is that Oracle would be snapping up the company.
In the past, there had been speculations of Oracle going after Red Hat. In fact at one point of time there was an attempt but things did not go past the preliminary discussions. With a large amount of cash reserves Oracle has a good chance of buying Red Hat now than ever before and it makes perfect business sense for Oracle.
The piece of the enterprise puzzle that Oracle does not yet possess fully is the operating system. I am discounting the United Linux initiative since it was never a contender. Some time back Oracle had even made an announcement that it would be supporting kernel level issues for Linux. That showed that the companyhas gathered enough technical competence in the area. Buying Red Hat would make Oracle’s product portfolio complete – a great database server in Oracle 8i/9i/10g, a brilliant application server in Weblogic, best of breed ESB and security products and with the potential acquisition of Red Hat a world-class operating system. Oracle already sells its database for Red Hat Enteprise Linux versions. On top of that Oracle sells a lot of ERP and CRM applications that can further benefit from this acquistion. So with Red Hat, Oracle becomes a true-blue end-to-end software vendor. Moreover, with Linux being a popular factor for cloud computing and SaaS, Red Hat acquisition becomes a sweeter deal for Oracle.
But like everything, there are bad sides to this deal. First and foremost is whether the open source initiatives of Red Hat still survive. Fedora is amongst the most popular flavors of Linux in the world. Will it still be actively developed? Probably yes because otherwise Oracle will stand to lose a lot. But what about the JBoss suite of products? With the acquisition of BEA, Oracle already possesses whatever JBoss provides on top of its own offerings. It does not make much sense for Oracle to retain the JBoss product line. Will they kill it then is the bigger question. In the short term Oracle will have to retain JBoss for the sake of customers. In the long run its surely going to kill it. Maybe they would provide free migration services to JBoss’s top customers. The smaller ones would have to make a choice. Overall the acquisition does appear to be a big loss for the open source.
If Red Hat goes to Oracle, the choices for customers reduce further – something that is never good for the ecosystem. The way Microsoft dominates the desktop, Oracle can dominate the Java enterprise landscape if the Red Hat merger becomes a reality.
Having open standards and conforming software from multiple vendors is probably better than the kind of consolidation Oracle is trying to achieve.