CEO Larry Ellison announced that the company will offer broad scale Linux support during his keynote at the company’s user conference in San Francisco. The offering, branded Unbreakable Linux 2.0, competes directly with Red Hat (RHAT) and Novell (NASDAQ:NOVL). Mr. Ellison expects the new offering to accelerate enterprise Linux growth by removing barriers to customer adoption, specifically quality, cost, and Linux indemnification.
This could displace budget dollars otherwise spent on proprietary operating systems, which can now go to Oracle (NYSE:ORCL) applications, middleware and database licensing. This creates customer value in offering a true end-to-end software stack. However the near term impact on Oracle’s operations is likely minor. This news potentially could have an immediate negative pricing and market share impact for RHAT and NOVL, though many details remain to be flushed out. The company’s new program is based on RHAT’s Enterprise Linux distribution, which somewhat validates its leading position in the market.
Symantec (NASDAQ:SYMC) reported results for the September quarter that slightly missed consensus estimates on the income statement, though relative to the model, the weakness was more in the enterprise business than consumer. Recall that the consumer business is where we have the most concerns going forward, as consumers will migrate to the “free” offerings from ISPs (Internet Service Providers). In addition, guidance for the December quarter will likely disappoint investors, as consensus estimates are at the high end of the guidance range.