As some analysts have been expecting, Oracle (NYSE:ORCL) has just announced plans to get into the Linux business. It essence, the company is copying Red Hat (RHAT)’s version of the software, then selling support services, undercutting Red Hat’s prices.
“Oracle starts with Red Hat Linux, removes Red Hat trademarks, and then adds Linux bug fixes,” the company said in a new release. “Oracle’s new Unbreakable Linux program will provide bug fixes to future, current and back releases of Linux. In other words, Oracle will provide the same level of enterprise support for Linux as is available for other operating systems.”
Oracle says it will provide Linux support for “substantially less” than Red Hat now charges. The company said the Unbreakable Linux support program will be available for as low as $99 a year per system.
The company said it will maintain compatibility with Red Hat Linux. The Linux code itself is being distributed free on Oracle.com.
Kudos to Rick Sherlund of Goldman Sachs, who has been predicting this move by Oracle for months.
Red Hat shares are getting clobbered on the news. In after hours trading, Red Hat is down $2 at $17.51. Novell, which sells Suse Linux, is down 8 cents at $6.02. Oracle is up 8 cents at $18.70.