|
07.18.07
Oracle To Buy Red Hat Or BEA?
 By Savio Rodrigues
Matt asks (almost as an aside to a post on a related topic):
My question: why not just buy Red Hat? Before Red Hat buys MySQL, and gives those database numbers a run for their money?
Then, Larry Dingnan writes:
A Credit Suisse analyst thinks BEA Systems is likely to go on the auction block in the next three to six months.
And the potential buyer is two likely suspects: Private equity firms or Oracle, which indicated it has no plans to slow down its acquisition pace.
I'll play Nostradamus and predict that Oracle will not buy Red Hat. Oracle may buy BEA. Here's why…
If it's possible to summarize the complexities of decisions in a large business such as Oracle based on reading a book about its founder & Chairman, then Oracle won't buy Red Hat for the same reason that Larry didn't buy Netscape. And no, it has nothing to with whether Larry's cat can write an operating system. It does have everything to do with the "value" that Red Hat brings to the table. Essentially, what does Red Hat have that Oracle doesn't?
Three key reasons for buying a tech company would be: technology, brand recognition and customers.
By announcing Oracle Unbreakable Linux, Oracle has already proven that Red Hat doesn't have a whole lot of technology that can't be easily replicated. Sure, Oracle UL hasn't been a rip roaring success to date, but I agree with Matthew Aslett, that this is a long-term investment.
Red Hat does have an awesome brand. But its brand is tied to open source. As long as customers relate the two, and the OSS market remains less than 1.8% of the total software market, the value of Red Hat's brand to Oracle is questionable.
Additionally, Red Hat doesn't bring a whole lot of customers that aren't already Oracle customers in some shape of fashion. Even if Oracle were to migrate every RHEL customer running Oracle DB to Oracle UL, the end game isn't getting customers to Oracle UL. Oracle's goal is getting customers to Oracle middleware & Oracle apps. Customers don't typically make application & middleware stack decisions based on their operating system. Consider the Microsoft customers who run WebSphere or SAP or Oracle Apps on Windows.
Oh, and if Oracle tried to buy Red Hat, I'm sure that other vendors interested in the future of open source and Linux would have some role to play in the discussions.
BEA is different. They have IP that Oracle can't get their hands on without an acquisition. BEA has good brand recognition in the middleware market, an area that Oracle wants to grow. BEA's customers are likely also Oracle's customers (as BEA always had an affinity with Oracle DB vs. DB2). But BEA's middleware customers could be migrated to Oracle's middleware stack, which is strategic to Oracle.
PS: My admiration for Oracle will subside after I finish the book I'm sure :-)
Comments
About the Author:
Savio Rodrigues is a product manager with IBM's WebSphere Software division. He envisions a day when open source and traditional software live in harmony. This site contains Savio's personal views. IBM does not necessarily agree with the views expressed here. |
