Red Hat's Szulik responds to Oracle's frontal assault

Red Hat's Szulik responds to Oracle's frontal assault

Summary: Red Hat CEO Matthew Szulik responded to Oracle's attack on its business, slashing supports costs for Red Hat Linux by half, by saying that his company will not cut prices. The remarks were made during an interview on CNBC, after the Red Hat stock tanked by nearly 25 percent after the Oracle announcement of a competitive service.

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TOPICS: Open Source
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Red Hat CEO Matthew Szulik responded to Oracle's attack on its business, slashing supports costs for Red Hat Linux by half, by saying that his company will not cut prices. The remarks were made during an interview on CNBC, after the Red Hat stock tanked by nearly 25 percent after the Oracle announcement of a competitive service. As reported by Reuters, Szulik said, "We've had a very productive seven-year relationship with Oracle. We want to make sure our products perform very well with Oracle."  Red Hat also put out a Q&A on its Web site to address Oracle's hijacking maneuver, maintaining that Oracle is forking the code, which may cause incompatibilities.

 
  Red Hat's Matthew Szulik and Oracle's Larry Ellison 

Stephen Shankland quotes a source who said that Cisco, with more than 5,000 RHEL subscriptions, is concerned that Oracle's Linux lacks the certifications earned by Red Hat and Novell's Suse.

"It's going to take years to develop the relationships with outside vendors currently certified for Red Hat and Suse," said the technician who requested anonymity. "For company like mine, we can't go out on a limb like that. It has to be a certified solution." 

Nonetheless, Red Hat will feel pricing pressure, especially among customers who are already tied  into more parts of Oracle's software stack and price-conscious buyers. Szulik said on Wednesday that the pricing comparison Ellison used is warped. "We don't have an enterprise customer that buys pays retail pricing. All our enterprise customers have volume discounts," Szulik said.

Now, the onus is on Oracle to respond to Red Hat's interpretation of Oracle's offering and prove that it can deliver better support than Red Hat at half the price. If Ellison and team show signs of delivering quality Linux services at more affordable prices and start poaching Red Hat support staff, Szulik will have to respond with deeper discounts. What is clear is that Ellison doesn't want to allow Red Hat to become the Microsoft of the Linux world, dominating core parts of the software stack. 

Below is part of the Red Hat Q&A:

Q: Does Oracle's announcement include support for the Red Hat Application Stack, JBoss, Hibernate, Red Hat GFS, Red Hat Cluster Suite, and Red Hat Directory Server?A: No. Oracle does not support any of these leading open source products.

Q: Oracle says their Linux support includes the same hardware compatibility and certifications as Red Hat Enterprise Linux. Is this true?

A: No. Oracle has stated they will make changes to the code independently of Red Hat. As a result these changes will not be tested during Red Hat's hardware testing and certification process, and may cause unexpected behavior. Hence Red Hat hardware certifications are invalidated.

Q: Oracle says their Linux support includes the same software compatibility and ISV certifications of Red Hat Enterprise Linux. Is this true?

A: No. Oracle has stated they will make changes to the code independently of Red Hat. These changes will not be tested during Red Hat's software testing and certification process, and may cause unexpected behavior. Hence Red Hat software certifications are invalidated.

Q: Will Oracle's Linux support be binary compatible with Red Hat Enterprise Linux so that my applications continue to work?

A: There is no way to guarantee that changes made by Oracle will maintain API (Application Programming Interface) or ABI (Application Binary Interface) compatibility; there may be material differences in the code that will result in application failures. Compatibility with Red Hat Enterprise Linux can only be verified by Red Hat's internal test suite.
Source Code Compatibility

Q: Will Oracle's product result in a "fork" of the operating system?

A: Yes. The changes Oracle has stated they will make will result in a different code base than Red Hat Enterprise Linux. Simply put, this derivative will not be Red Hat Enterprise Linux and customers will not have the assurance of compatibility with the Red Hat Enterprise Linux hardware and application ecosystem..
Updates

Q: Oracle says they will provide the same updates as Red Hat Enterprise Linux. Can they do this?

A: There are multiple requirements to building binary compatible software. One piece is the source code; another is the build and test environment. While Oracle may be able to take the source code at some point after a Red Hat update release, obviously their build and test environment will be inherently different than that of Red Hat Enterprise Linux. For similar reasons, there is no guarantee that the source code for the Red Hat Enterprise Linux update will work correctly when integrated into Oracle's modified Linux code base.
Support & Maintenance Lifecycle

Q: In order to get support and maintenance for Red Hat Enterprise Linux, do you need to upgrade to the most recent version?

A: No. Red Hat subscribers enjoy support and updates for all versions for up to 7 years. Throughout that time, Red Hat provides regular maintenance releases as part of the Red Hat Enterprise Linux subscription. This is supplemented through our support services by a 'hot-fix' process that provides critical bug fixes on a customer-specific basis. Oracle "reserves the right to desupport certain Enterprise Linux program releases" as part of their Oracle Enterprise Linux support policies.
Support Level Flexibility

Q: Does Red Hat allow you to tailor your support level to your workload?

A: Yes. Many customers match their Red Hat Enterprise Linux subscription level to their application SLA requirements. For example, customers may choose a Basic subscription for non-mission critical file and print servers, while selecting Premium subscriptions for database servers. Oracle does not allow this flexibility - their support policy reads: "If acquiring Enterprise Linux Premier Support, all of your Oracle supported systems must be supported with Enterprise Linux Premier Support."
Security

Q: Can Oracle produce timely security updates to Red Hat Enterprise Linux as they stated?

A: No. There will be a delay between the time a Red Hat Enterprise Linux update is issued and the time the source code makes its way to Oracle. There is no guarantee that the source code for the Red Hat Enterprise Linux update will work correctly when integrated into Oracle's Linux code base; this integration and test will take additional time. In the case where the update corrects critical security flaws, Oracle customers may be exposed to additional risk.
Linux Assurance

Q: Red Hat Enterprise Linux has government security certifications including Common Criteria Evaluated Assurance Level (EAL) 4+/Controlled Access Protection Profile (CAPP). Will Oracle's version of Linux inherit these certifications?

A: No. Common Criteria evaluations are conducted on a specific configuration of software and hardware. Any changes to the software such as those Oracle has announced will invalidate certification.
Customer Collaboration

Q: Will Oracle's Linux customers have the same degree of influence over Oracle's Linux as Red Hat's customers do with Red Hat Enterprise Linux?

A: The support we provide for Red Hat Enterprise Linux starts when Red Hat and its customers collaborate in the design of new versions. This collaboration extends through the development, testing, and production deployment of Red Hat Enterprise Linux. Vendors of a derivative distribution are simply not positioned to provide their customers the same collaboration opportunity.
Support Partners

Q: Hardware vendors such as Dell, HP, and IBM provide support for Red Hat Enterprise Linux. How is Oracle's support offering different?

A: Red Hat's hardware partners provide front line support to customers, backed by Red Hat. Red Hat has a close contractual relationship with these partners, which requires training, well defined escalation paths, Red Hat back-line support, and cooperative customer issue management. Our joint customers enjoy the same degree of collaborative participation as any Red Hat customer. 

 

Topic: Open Source

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  • Sounds like he is scared spitless.

    And he has every right to be.
    No_Ax_to_Grind
    • This is the problem...

      ...with relying on maintence and service charges to support an OSS business. Anyone can take your (open) source and start supporting your users at a lower cost, even incorporating your security updates, especially a big ugly partner-eater like Oracle who have spare consultants sitting on the bench.
      A.Sinic
  • Open_Source lock-in continued...

    Open_Source lock-in, RedHat wants to be the only vendor providing support, well sorry someone else can do it cheaper and provide support plus provide them with a database all in one package. The stock [b]tanked 25%[/b] so investors are [i]very[/i]concerned and have every right to be.

    They were under the idea they are the best or the only ones to provide support, sorry no one wants Vendor lock-in from MS much less Linux...

    Pretty funny.
    Linux User 1
    • Investors are cattle.

      The least little thing startles them and they stampede. The truly sad thing is, the ones that should know better are usually the first to get spooked.
      swoopee
  • GPL is a real nightmare

    RedHat placed all of its eggs in [i]one basket[/i] trying to sell support. Well they are not the only game in town and competition has arrived and they are crying foul. Too bad, if Oracle can do it cheaper with a database and other options then RedHat will fade away into a distant memory.

    One thing I have to say for MS or Apple they do not have this problem and they never will.

    GPL is giving away hard work for nothing thinking that you are the only one in town with Linux skills, I got my RHCT in 2004. Maybe RedHat needs to provide a better business case or re-invent their product lines and offerings?
    Linux User 1
    • Ok, maybe I need to read the article again.

      I missed the part where RedHat cried foul. I got the impression that they were saying Oracle really wasn't in a position to compete with them and that they really aren't very concerned about it at this point.
      swoopee
      • All of the eggs in one basket

        If RedHat can't hold up in the market to pressure from competition then they have serious problems.

        The GPL has a sharp point on it, and in the end you get stabbed.
        Linux User 1
        • RedHat's done well for aquite a while.

          I doubt Oracle is going to hurt them too badly. I guess we'll just have to wait and see.
          swoopee
  • A doomed business model...

    As many have said in the past, a business model based on everyone providing the same thing, with the same services is doomed to fall to who ever is willing to "win" the race to the bottom.
    No_Ax_to_Grind
    • Skills are getting cheap...

      I have my RHCT and I have to say the skill sets are becoming more common and the knowledge base is growing where RedHat will find itself in financial trouble with an over-priced business model that anyone can do.

      When you have over-lapping support by X number of companies it will become a price war for the lowest bidder. With the stock tanking 25% posting unfakeable Linux does not instill confidence. Sounds like they are running scared and they do not have a way to compete in this market with competition with other vendors.

      [b]RedHat has placed all of their eggs in one basket not a good business plan...[/b]
      Linux User 1
    • Not "everyone providing the same thing".

      Red Hat and SuSE are the commercial Linuxes, with certifications and other requirements for business confidence. That's what Red Hat is relying upon to keep them safe from Oracle.

      I think that Oracle will not have as much difficulty obtaining acceptance as Red Hat is now implying.

      Red Hat does still have prospects because Oracle will be selling its version of Red Hat Linux. A company which does not want to deal with Oracle on other products will, I think, be unlikely to accept that company only as a Linux vendor.
      Anton Philidor
      • Hmmm, not the way I read it.

        The way i read it is that you can download and install the full Red Hat preoduct, (with all the same "assurances") and then Oracle will provide the support at half the cost.

        Sort of like buying a Chevy but taking it to your local mechanic instead of paying the big fees to the dealership. In the end its the same Chevy.
        No_Ax_to_Grind
        • "Bug fixes"

          Red Hat's statement makes a great deal of the fact that Oracle will make changes to Red Hat's product. Quoting:

          "Oracle has stated they will make changes to the code independently of Red Hat. As a result these changes will not be tested during Red Hat's hardware testing and certification process, and may cause unexpected behavior. Hence Red Hat hardware certifications are invalidated."

          Sort of like voiding the warrantee on that Chevy by customizing it.
          Anton Philidor
          • What happened to 'Choice'.................

            I find it amazing how RedHat preached [b]Choice[/b] now they are running scared from having an option to their over priced support.

            Choice a magic word now they claim to have nothing to do with, very ironic indeed.....

            Nothing like talking out of two mouths!
            Linux User 1
          • The clones will still exist.

            Red Hat can accept parasites that do not have Oracle's size and resources. That's Red Hat's version of choice, based on knowing the market willing to purchase the company's software.

            As this incident shows, Red Hat is selling software, not services. Customers are expected to keep buying products from Red Hat because of aspects of the software, and not quality of service.
            Anton Philidor
          • Difficult business model over time to produce ROI...

            This will continue to escalate with other companies offering the same kind of support. It will be a tough sell for a premium price.

            RedHat will have to downsize and or lower their support prices to compete or be phased out. With Novell and others nipping for a bite it will be very interesting field of action.
            Linux User 1
      • No need to rely on RedHat

        The GPL will be the end, it has been a nice ride.
        Linux User 1
  • Support on an OS release for 7 years

    Yeah right, so a customer is going to run RHEL3 in 2012?

    They are going to push the companies to upgrade to have the latest features and gizmos.
    Linux User 1
  • Oracle runs mission critical systems...

    To me this was a good move, why not have Oracle supporting your whole works, than just one-sided this was an excellent move and RedHat is in trouble.

    No ones cares about Stallman or any of his chicanery of wanting something for nothing mentality. In the end this will help Oracle because other business models will follow suit, RedHat finds will paint into a corner they cannot escape. They will be wearing 'black hats' when all of this is said and done.

    Another farce supporting an OS for 7 years, the name of the game is upgrading for more money why would a company want to stay stagnant much less other applications would not work in 7 years.

    The GPL is a failed concept only to have large billion dollar corporations exploit the wasted labor of socialist workers. If anyone has ever seen the wallpapers for the Mozilla group it is of a Communist star with workers worshiping it with praise. The collective farms of the USSR caused massive starvation in the mighty Soviet Union just as the GPL does in software. It all ends in ruin with this failed concept of free work for nothing. If it was such a great idea IBM would have jumped in on it, instead they do middleware, sold off their ENTIRE pc/laptop division to China and now focus on servcies plus the mainframe/server arena.

    In 5 years will there be a need to pay for support for Linux? Who will be around, who will be out of business and bankrupt?

    Very interesting...
    Linux User 1
    • Interesting

      "why not have Oracle supporting your whole works, than just one-sided this was an excellent move and RedHat is in trouble"

      Actually, Oracle has a very difficult time running on Red Hat, upgrade a libarary and Oracle dies hard. Iy's easier for Oracle to provide a back levelled OS, complete with bugs and security holes.

      "No ones cares about Stallman or any of his chicanery of wanting something for nothing mentality. In the end this will help Oracle because other business models will follow suit, RedHat finds will paint into a corner they cannot escape. They will be wearing 'black hats' when all of this is said and done."

      Inane babble... Yawn...

      "Another farce supporting an OS for 7 years, the name of the game is upgrading for more money why would a company want to stay stagnant much less other applications would not work in 7 years"

      For the customer, it costs the same whether you upgrade to the latest and greatest or stay on old stuff. Companies change when it makes sense, could be a financial decision, technical, whatever.

      "The GPL is a failed concept only to have large billion dollar corporations exploit the wasted labor of socialist workers. If anyone has ever seen the wallpapers for the Mozilla group it is of a Communist star with workers worshiping it with praise. The collective farms of the USSR caused massive starvation in the mighty Soviet Union just as the GPL does in software. It all ends in ruin with this failed concept of free work for nothing. If it was such a great idea IBM would have jumped in on it, instead they do middleware, sold off their ENTIRE pc/laptop division to China and now focus on servcies plus the mainframe/server arena."

      Communism failed because human nature does not permit it to work as a means of government. The Kibutz work because people want to be there. Try to force that on people involuntarily and you have a 100% chance of failure. The GPL works becuase people want to write code for free and donate it. Simple.

      "In 5 years will there be a need to pay for support for Linux? Who will be around, who will be out of business and bankrupt?"

      Yes, there will be a need. It's getting more complex, not easier. How it is paid for is the big question.

      Very interesting...

      The most accurate thing you said :-)
      magcomment