Telstra has revealed the addition of almost one million new mobile services in the six months to December 2011, but Sensis revenues plummeted 24 percent in 12 months.
Imagine you're the boss of a company which has over the past few years built a reputation as a leader in its field of the supply and maintenance of enterprise Linux systems. Suddenly in one fell swoop, a powerful and much larger company moves in and undercuts your prices by 50%, offering exactly the same products and services, with arguably a better level of support. What do you do?
The short answer is nothing. Not because you don't want to respond but because you can't respond.
We are of course talking about Red Hat and Oracle. Red Hat makes its
money by supporting its open source Linux distribution for enterprise
customers. Now business software giant Oracle is going to market with
Red Hat Linux support, offering the same services at half the price.
Where are budget conscious enterprise customers going to go?
The market answered that question after hours by savaging Red Hat
shares. Basically, Oracle has usurped Red Hat's business and there's
not a thing that Red Hat can do because the nature of open source and
Linux makes the software freely available. Provided that you have the
people and the infrastructure to support that software - and Oracle has
- you can simply go to market with the same offering.
In the case of a powerful company like Oracle, you can afford to
drastically undercut a much smaller rival like Red Hat and offer a
wider range of services to boot.
The problem for Red Hat is that the open source model upon which it has
built its business is not about selling proprietary software. It's
about supporting freely available software. The only barrier to entry
is people with expertise - and Oracle already has those.
Oracle CEO Larry Ellison was correct when he indicated back in April
that Red Hat was too expensive to buy. In fact, as analysts have
pointed out, any price is too expensive for Oracle because it doesn't
need to buy Red Hat. Oracle has already entered the Red Hat business
without spending a penny.
The same thing holds true of any company that builds a business based
on open source software. The business will always be about people and,
unlike intellectual property, people can be easily bought.
David Bass
| ComOps, a leading Australian provider of business software products and services, has won a competitive tender to deploy its Salvus safety, r…
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