Oracle announced certification of Oracle Database for Red Hat Enterprise Linux (RHEL) 6 and Oracle Linux 6 yesterday. By itself, not a particularly remarkable announcement. Enterprise database certified to run on enterprise operating systems. Yawn. The real news is the last bullet point, which is yet another potshot at Red Hat’s business model. “Effective immediately, Oracle will provide its Red Hat compatible Linux binaries, updates and errata for free.”
Oracle Linux is a binary compatible distribution cloned from RHEL sources. Oracle has started to do a bit of value-add with its own Linux kernel and the addition of Ksplice, but it’s basically just another RHEL clone.
Since Oracle introduced Oracle Linux, it provided ISOs of its installation media and the binary RPMs for production use. What was missing, previously, is the bugfix and security updates that customers depend on for production systems. If you wanted a binary compatible RHEL clone with regular updates, you needed to depend on community projects like CentOS or Scientific Linux and those updates weren’t always speedy in coming.
The freebie from Oracle is roughly equivalent to the self-support subscription Red Hat offers to its customers. The self-support subscription runs $349 per server, per socket pair. (So a server with four processors would cost $698 per year, and so on.)
So what Oracle is providing here is a free enterprise distribution with what amounts to the same SLA for updates that paying customers get. There’s no guarantee, but if Oracle is providing the updates and errata to paying customers within the bounds of an SLA, the updates should become available at the same time for the non-paying users.
Should Red Hat Worry?
Red Hat doesn’t supply a breakdown of its subscription revenue by subscription type, so it’s hard to say what percentage of revenue comes from the bottom-tier subscription. It might be a lot, it might be a little. But this is an easy shot at Red Hat’s bottom line from Oracle and it’s going to be hard for some IT managers to make the case to pay for Red Hat. That doesn’t mean there isn’t one, because paying Red Hat ensures that some of that money goes back into development of RHEL.
Oracle seems to hope, according to Wim Coekaerts’ post on the change that the freebie updates might bring in some paying customers over time. “The nice thing is, if you want a complete up to date system without support, use this, if you then need support, get a support subscription. Simple, convenient, effective. We have great SLA’s in producing our update streams, consistency in release timing and testing of all the components.”
It will be interesting to see how, or if, Red Hat reacts to this. Red Hat has changed its development practices a bit to try to thwart Oracle and Novell’s ability to provide support to customers. There’s very little that Red Hat can do to keep Oracle from undercutting its no-frills subscriptions, though.
This is why Red Hat is betting hard on the cloud and PaaS services that might provide revenue streams unrelated to just paying for support subscriptions. Though Red Hat has done very well selling Linux subscriptions and support, that’s a model that isn’t going to get any easier to make a profit at.
If you’re using RHEL or a RHEL-clone, let us know in the comments. What distribution are you using, and are you paying for support? Is the free-ride Oracle Linux updates good enough for your business?
