Larry loves Linux but not the cost

Last week’s report that Oracle boss Larry Ellison had been considering buying a Linux supplier was just the latest endorsement for the open source movement by the (generally considered) more serious business software community. Firms have acknowledged for several years now that there is money to be made in so-called ‘free’ software. The question is: how?

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By  Peter Branton Published  April 23, 2006

|~||~||~|Last week’s report that Oracle boss Larry Ellison had been considering buying a Linux supplier was just the latest endorsement for the open source movement by the (generally considered) more serious business software community. Firms have acknowledged for several years now that there is money to be made in so-called ‘free’ software. The question is: how? The open source community has just seen one of its biggest deals to date, with Linux supplier Red Hat buying middleware supplier JBoss for US$350million this month (see IT Weekly, 15- 21 April 2006). The deal was widely seen as allowing Red Hat to better compete with the established software giants: the likes of IBM, Microsoft and, yes, Oracle, by having its own full ‘stack’ of infrastructure products. Corporate customers want to deal with a serious corporate player that can offer them proper support — even if the product that is being supported is free — seems to be the rationale behind the deal. The lack of such corporate support was widely perceived as holding back open source in the past, with the established players quick to point out its shortcomings. “Businesses need to be secure. If your Linux system breaks down, you can’t exactly call up Linus Torvalds and ask him to come round,” IBM’s Irving Wladawsky-Berger once said when he was heading up the firm’s Unix efforts. Now that he is vice-president of technology and strategy at IBM — which has invested heavily in open source in the intervening years — he seems to have changed his tune a little. Addressing the Open Source Business Conference in San Francisco, US, earlier this month, he talked about “a new kind of innovation cycle” in which companies build their own proprietary offerings on top of open source platforms. While it is undoubtedly good for customers that the established firms are looking at the open source movement as a serious resource, it may not prove so good for the firms that have already been trying to make revenue from it. Ellison last week (perhaps intentionally) sounded a warning to the Red Hats of the world. The open source movement was not going to be a threat to Oracle, he told the UK’s Financial Times, because “if an open source product gets good enough, we’ll simply take it.” As open source is free to all, “a company like Oracle is free to take it for nothing, include it in our products and charge for support, and that’s what we’ll do,” he said. As such, buying an open source player for big bucks makes little sense, Ellison argued, as the underlying product will always, by definition, be free for your competitors to take as well. For a firm like Red Hat, which is already trying hard to justify its US$5.3 billion Wall Street valuation, that just may be the very last thing it wanted to hear. ||**||

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