Wall street maneuvers for itself
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| Author | Content |
|---|---|
| grouch May 11, 2006 8:23 AM EDT |
The article quotes Laura Didio. (I won't). To anyone familiar with her pontifications with respect to SCOG and AdTI, this is a red flag warning that facts may be scarce in the document and speculation with intent may be rampant. This article appears to be names and analysts attempting to influence perceptions in the isolated world of stock analysts, day traders and investment bankers. Check this out, from the last page: "But Sherlund, who downgraded Red Hat to underperform in April, worries that competition from Oracle could result in pricing pressures that could hurt Red Hat's margins. "Oracle could easily undercut Red Hat on price, offering a largely similar Linux product for a much reduced price compared to RHEL or even at a nominal cost if bundled with other Oracle products including Oracle 10g database," he wrote. Goldman has or is seeking investment banking relationships with Oracle and Red Hat." I can easily undercut Red Hat on price, using what Red Hat offers for download in compliance with the GPL. Surely my "largely similar Linux product" would be worth having Goldman Sachs seek a relationship with me. Be sure to watch for Red Hat stock to plummet, now that the word is out that some grouch posting a comment is out to undercut their "product". |
| tuxchick2 May 11, 2006 8:53 AM EDT |
I always believe analysts. After all, they wouldn't have jobs and no one would print their stuff if they weren't smart and accurate. But seriously, DiDio almost makes sense: "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." Ok, so it doesn't quite parse, but she is right that it's not a trivial task. Even so, why not bundle the operating system with their other products? Oracle could deliver a specialized, tuned and optimized complete system. We're already seeing operating systems bundled with servers, like Asterisk@Home and Open-Xchange. The question for Oracle is do they want to get into the operating system development and support business, or work with a third party like Red Hat. I don't see Oracle posing a threat to Red Hat or other commercial Linux vendors, not as long as Oracle is only distributing a unified bundle. I can't imagine why they would want to go into the operating system business itself. |
| grouch May 11, 2006 9:27 AM EDT |
tuxchick2: (Note how DiDio gets the MS line in there about commodity? Doesn't fit, but the big lie must be reinforced at every opportunity). That depends on how you define "trivial". ftp://ftp.redhat.com/pub/redhat/linux/enterprise/4/en/os/i386/SRPMS/ Red Hat knows about the GPL. For DiDio, I'm guessing it would be far from trivial to download the source, remove the trademarks and build the system. Note this quote from the article: 'But Russ Herrold, a principal at CentOS, says building a stable Red Hat competitor would be "very doable; it's not particularly hard." he said on the Goldman call. How long would it take? "Could be done in three months with 15 engineers."' Stocks only relate to real value if viewed over long periods. In the short-term, almost all investment bankers and analysts are trying to influence perceptions of value. |
| tuxchick2 May 11, 2006 9:38 AM EDT |
They're talking about two different things: developing an all-in-one stack, or competing with Red Hat. They're not the same. Typical muddied thinking. For Oracle, just plastering their DB and whatever else they have on top of CentOS would be trivially easy. But it wouldn't end there, because then they'd have to support the operating system. Lotsa luck. There is no value added that way; where I think they could deliver some real value is developing a customized Linux. It would not be a general-purpose distribution, but designed solely to support their DB and whatever other applications and servers they put in the bundle, all slimmed down and tuned for maximum performance. If Ellison really wants to get into the operating system business he's nuts. All this yapping about 'Red hat is too influential and must be cut down to size' is ludicrous. Little pipsqueak Red Hat?? Get a grip. I think he has a more devious plan, perhaps knocking the stock price down for a takeover, or building leverage for some kind of deal with Red Hat. And yes, I noticed the obligatory MS plug, no matter how irrelevant. That kind of consistency is comforting in an uncertain world. :) |
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