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Linux and Open Source

Steven J. Vaughan-Nichols & Paula Rooney

Oracle-BEA deal expands lock-in strategy, offers new risks and opportunities for Red Hat

By | January 16, 2008, 10:14am PST

Summary: Oracle’s $8.5 billion dollar buyout of BEA dramatically shifts the enterprise applications software market once again, as well as additional pressure and opportunities for Red Hat’s JBoss Division — and the whole open source apps community in general. The deal, if approved, expands Oracle’s immense enterprise applications software kingdom, and should give CIOs pause before [...]

Oracle’s $8.5 billion dollar buyout of BEA dramatically shifts the enterprise applications software market once again, as well as additional pressure and opportunities for Red Hat’s JBoss Division — and the whole open source apps community in general.

The deal, if approved, expands Oracle’s immense enterprise applications software kingdom, and should give CIOs pause before signing over their souls to Larry Ellison. Although Red Hat is still digesting its acquisition of open source middleware JBoss, as well as its appointment of a new CEO late last year, the company should move fast to capitalize on its powerful rival’s key weakness: its never ending quest to own the aps market and lock in customers.

For years, Red Hat and other open source backers have pointed to freedom and choice as the most valuable assets offered by open source. At the same time, proprietary database giant Oracle has worked feverishly to amass a virtual monopoly in the enterprise applications software market, extending its iron grip into the middleware and SOA space in an effort to lock in customers and stymie IBM, Microsoft, Red Hat and the spread of open source itself.

Make no mistake: Oracle’’s acquisition binge has put an end to the “best of breed” apps era and while irritating its traditional rivals also increasingly pits its proprietary software stack directly against the emerging open source software stack.

Sure, Oracle launched its own brand of Linux but no doubt the gesture was a not-so-veiled slap at Red Hat for buying JBoss. Any CIO who hopes Oracle will offer its most lucrative apps — including WebLogic — under the GPL or anything like it are dreaming.

The time is right for Red Hat — and other open source apps vendors — to strike a blow at Oracle and turn up the volume on ithat vendor’s lock-in strategy. The open source community has been quite vocal against Microsoft for existing at all, and yet has given Oracle a free ride. Why? Because Oracle offers its software on Linux — Microsoft’s nemesis?

Who is the real enemy of open source?

Even Microsoft has attempted to soften its stance with customers, pledging to make it software at least interoperable with leading open source offerings. Through its acquisition binge, it seems as if Oracle is trying to crush any and all prospects for emerging open source applications as well as those of proprietary rivals. Red Hat and open source companies should turn up the volume on this stratey and target nervous customers who may be tiring of the Redwood City, Calif. company’s power play.

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Paula Rooney is a Boston-based writer who has followed the tech industry for almost two decades.

Disclosure

Paula Rooney

Paula Rooney owns no stock in the companies that she covers. She holds a 401K that is managed by Morgan Stanley.

Biography

Paula Rooney

Paula Rooney has covered the software and technology industry for more than 20 years, starting with semiconductor design and mini-computer systems at EDN News and later focused on PC software companies including Microsoft, Lotus, Oracle, Red Hat, Novell and other open source and commercial software companies for CRN and PCWeek. She received a silver award from the American Society of Business Publication Editors in 2005 for her profile on Linus Torvalds and edited and co-authored "Partnering With Microsoft," a book about Microsoft's channel published by CMP Publishing in 2004. Rooney graduated from the Columbia University Graduate School of Journalism in 1997. In her off time, she enjoys scuba diving, sailing, sun worshipping, running, reading, surfing (the net) and hanging out with her family. She resides on the shores of Scituate, Massachusetts.

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Hmmm. No more discussion on this?
cornpie 18th Jan 2008
I'm amazed more people aren't talking about this. Oracle and Sun being Oracle and Sun, they must be planning to make money on this somehow. Buying the products to eventually kill them?
0 Votes
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More options, different AS markets
Richard Flude 16th Jan 2008
I'm not sure Oracle/BEA customers significantly overlap the market for Red
Hat/JBoss. The later is way down the tree, more in the MS/.NET/SQL Server space.

Sun/MySQL is the one hoping into the Red Hat/JBoss space, open source solution
with support option.

Oracle/BEA is top end stuff, with prices to match and customers that can afford it.
Whilst many CIOs may be attracted to the lower price offerings, are they going to
bet their job (and company) on the switch? Given the technical competency of most
of them I'd doubt it - not worth the risk.
Hi Paula,

Your use of 'applications' alongside the BEA acquisition is somewhat confusing. BEA doesn't provide applications. Like JBoss, BEA is a middleware provider. The Oracle deal limits customer choice for middleware, but has little impact on the application choices that customers have. Arguably, Oracles acquisitions of app vendors already impacted the app choice.

The reason you won't see WLS (weblogic server) show up in OSS land is because Oracle doesn't need to do so. The gals/guys over at Oracle are smart enough to realize that they can grow revenues at a healthy pace without having to OSS their products. Keep in mind that these folks are legally required by their shareholders to increase company value.

I really wish there wasn't an enemy and protagonist in a discussion of the software market. Both the OSS and commercial software models have long and healthy growth ahead. Heck, Marc Fleury (ex-CEO of JBoss) said as much. See: http://weblog.infoworld.com/openresource/archives/2008/01/fleury_rodrigue.html
"buy" PostgreSQL, since it does not have an owner like MySQL. Anyway, the Sun purchase of MySQL, and the Oracle purchase of BEA, will mean that these three will be bumping into each other a lot more. And, this will also mean more vibrant competition around Java and databases. It will be interesting to see if RedHat tries to align itself with PostgreSQL.
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Hmmm. No more discussion on this?
cornpie 18th Jan 2008
I'm amazed more people aren't talking about this. Oracle and Sun being Oracle and Sun, they must be planning to make money on this somehow. Buying the products to eventually kill them?

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