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.
When the market wipes a quarter of your company's share price because a powerful competitor declares its intention to enter your market space, one would think tough measures are called for. Unfortunately Red Hat, which now has to contend with Oracle competing for support of its Linux distribution, appears to have confused tough measures with talking tough.
When Red Hat CEO Matthew Szulik said last
week that his company would not cut prices, despite Oracle's
announcement that it will offer support for half the current going
rate, he was talking tough. However, few market analysts believe Red
Hat can simply ignore a rival like Oracle and expect to maintain market
share.
The problem for Red Hat is that, as far as Linux is concerned, the
company doesn't actually own anything. Sure it has wrapped up a Linux
distribution and called it Red Hat Linux but it can't actually sell it
as a product because it's open source. It can only make money
supporting it.
What this means is that Red Hat can't stop anyone else taking the same
distribution, rebranding it and also offer support for the product at a
cheaper price, which is what Oracle intends to do. Welcome to the world
of open source, where the software is free but the people who support
it are not.
While some deny it, a sizeable proportion of analysts believe that Red
Hat's very survival is at stake now that Oracle has announced its
intention to move in. Oracle could do two things. It could continue to
squeeze Red Hat until its share price tanks and the company becomes
cheap enough to buy with small change. Alternatively, Oracle could
completely squeeze Red Hat out of business and snap up as many of its
technical staff as it can.
Anyone who believes that hard headed business users will stick with Red
Hat for sentimental reasons and snub big bad Oracle should think again.
In these days of cost conscious IT departments, the CIOs, CTOs and MIS
managers will buy support from whomever can provide it at the best
possible price.
For Red Hat, which lives on its support contracts, all of the above
spells bad news. The company's only hope is to lift its game, drop its
prices and try to convince Oracle that its business is not worth the
fight. However, based on Oracle's recent track record, that does not
appear likely.
David Bass
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