April 9, 2003

Ellison an oracle for open source?

- Lee Schlesinger -
Larry Ellison is putting his money on open source development. Over the last couple of weeks headlines quoting Oracle Corp.'s chief executive officer have included "Oracle ups Linux efforts with ISV program" and "Linux will wipe Microsoft out of data center." What's his rationale?

This is a shrewd move on the part of a man not known for making too many major mistakes in business. (Though I'm still scratching my head over his New Internet Computer Company, established to sell Linux-based "network computer" hardware. Maybe the fact that it's still in business means he was right after all.)

Ostensibly Oracle has little to gain by backing one platform over another. Its eponymous database runs not only under Windows and Linux, but also a host (pun intended) of other operating systems, including the three major commercial variants of Unix. Since Oracle is operating-system-agnostic, Ellison would seem to have nothing to gain by backing Linux.

But if you view the market from the bottom up, things look different. The Linux database market is far less mature than the Windows server database market. Today there are several good choices, both open source and proprietary, for organizations that need a Linux-based DBMS. Ellison wants to grab mind and market share in an expanding market. That way, if his predictions pan out, the dollars he invests today will accrete to the bottom line for years to come.

Oracle isn't trying to put MySQL and PostgreSQL out of business. It's aiming its budget at the likes of IBM's DB2 for Linux and Sybase's suite of Linux products -- the commercial vendors Oracle has been going head-to-head with for years.

One of the strongest of Oracle's competitors is SQL Server, marketed by Microsoft, a company that also sells a server and a desktop operating system. One way Oracle may be able to hurt SQL Server's sales is to lower the sales and market penetration of the operating system SQL Server runs on. That's another good reason for Oracle to provide incentives to Linux software developers.

What a great time to be a Linux software entrepreneur. According to IDG, "Oracle will provide two dollars for every dollar an ISV invests of its own money. It will also share its customer list with them to help generate sales leads and will allow them to market their Linux offerings through its Web site," and "provide access to migration tools for free." It may not be raining money, but I'd have a bucket handy just in case.

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