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Oracle Seeing Red Hat

Why would Oracle, which is already in two distinct lines of business -- databases and applications -- opt to move into a third? "We believe that Mr. Ellison wants a Linux operating system so that Oracle can build a fully integrated stack (operating system + database + middleware + applications) to challenge Microsoft (MSFT - Get Report) and also to preempt Red Hat from moving unopposed up the open source stack," Sherlund wrote.

Moving "up the stack" is industry parlance for expanding the reach of a software company from providing just one function to providing all, or nearly all, of the software required to run a business.

Ironically, Oracle and other vendors that supported Red Hat as a counterweight to the Redmond, Wash, behemoth, now see Red Hat as the Microsoft of the open source world and feel the need to lessen its influence. IBM (IBM - Get Report), for example, is widely believed to have helped Novell purchase Suse Linux to ensure that there would be a viable alternative to Red Hat.

Although there's a general feeling that Oracle will likely go ahead and launch a version of Linux, there's disagreement on how much of a threat it would pose to Red Hat's business and hence, its share value. Oracle did not respond to several requests for comment.

At one pole are analysts like Laura Didio of the Yankee Group, who disagrees with the thesis that building a Red Hat clone would be quick and easy. "Linux is not a commodity and software is as much an art as it is a science. If he bases his clone on the General Public License the overarcing agreement covering the fair use of Linux , we're talking about 6 million lines of code to debug," she says.

With the market for experienced Linux engineers tightening, the effort could take as long as a year, not counting time to test compatibility and other issues, she says.

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