Oracle OpenWorld was a lot different than arch-rival SAP’s SAPPHIRE ’06 conference. For one, SAP used the keynote speeches to discuss its product and corporate strategies. If partners were invited on stage, it was only for a cameo appearance. 

Oracle chose to allot nearly 50% of the keynote timeslots to partners. Attendees were treated to sales pitches from the CEOs of AMD and Sun. There were two really intriguing presentations from the top executives at Hewlett-Packard and Cisco. HP’s Mark Hurd used his time to talk about how he’s driving IT innovation at his firm, while Cisco’s John Chambers led a brilliant demonstration of his company’s “quad play” strategy around data, voice, video, and mobility. He demonstrated how quad could be used at work, at home, and at a baseball stadium to watch replays, keep score, and have a web chat with a friend about the game. He also showcased his company’s new TelePresence videoconferencing system that appeared to be very similar to HP’s Halo Collaboration Studio.

Ellison shares stage with four penguins

If attendees were hoping for futuristic razzle-dazzle from Larry Ellison, they will have to wait until next year. Not that there weren’t cool effects. Prior to his speech, Mr. Ellison and his executive team rang the closing bell at NASDAQ from thousands of miles away. This was done to commemorate the company’s 20 years as a publicly traded company.  And, of course, there were the four live penguins that joined him on stage as he announced Oracle’s plans to offer “enterprise class support” for Unbreakable Linux. Specifically, the company wants Linux users to switch their support from Red Hat to Oracle.

Why do this? Mr. Ellison pointed to three flaws with current Linux support: there is no enterprise-level support, service is expensive, and there is no intellectual property indemnification. The latter is a reference to the ongoing SCO-IBM lawsuit.

New promotion: Linux support at a quarter of Red Hat’s list price

The program also includes aggressive pricing that comes in at about half of Red Hat’s. In addition, Oracle will be running a promotion for the next few months that will provide support at half of the new price, or just 25% what Red Hat lists at.

That was the keynote—an hour or so on Linux with a little bit about grid computing, a brief demo on how easy it is to move from Red Hat to Oracle, and a series of video clips from many of the keynote vendors and others thanking Oracle for adding this new service. 

No mention of the progress being made on Fusion applications or service-oriented architectures (SOAs). No talk about the vast improvements being made to the user experience or plans to add Web 2.0 functionality. Granted, some of these topics were covered in keynotes by Oracle’s John Wookey and Thomas Kurian, but no other speaker drew the crowd and buzz that Larry Ellison did.

Mr. Ellison closed the keynote by taking questions from the audience. One attendee asked if the goal was to put Red Hat out of business. The answer was “no.” Another approached the microphone and said, “You said Red Hot won’t go out of business. Should we assume that Windows will be going out of business?” Mr. Ellison replied, “We should only be so lucky.”

At a press conference right after his keynote, I asked one of the Oracle executives to provide some color on the state of Oracle’s Linux business. How many database servers or application servers run Linux now, and how has this changed over the last few years? He dodged the question.

After the keynote, he told me that if Linux demand grows then Oracle would get more than its fair share of the new business generated. That was it. He didn’t talk about it being a potential billion-dollar market or a new path to selling more database software, middleware, applications, and/or other software and services.

Was Red Hat a threat?

During the press conference, several reporters noted that Red Hat’s stock price was trending down in after-hours trading. Almost immediately, it went down 10%. By the end of the press conference, one reporter noted that it was down about 17%. The stock was down 24% on Thursday.

While Red Hat positions itself as the “leading provider of open source solutions to the enterprise,” it’s a relatively small company compared to Oracle. For the six months ending August 31, Red Hat had total revenue of $183.7M, up 45% from the same period last year. The company also reported deferred revenue of $284.1M, and said that it had $1B in total cash and investments.

Red Hat purchased JBoss in April. JBoss was best known for its open source software for application servers. It also has a line of middleware products. Red Hat is also an investor in MySQL, arguably the best-known of the open source database products. Put all of the pieces together and Red Hat has assembled a formidable open source stack.

Did Oracle target Red Hat to gain leadership in Linux services or to thwart the stack? Maybe neither. In a discussion with Jim Shepherd this morning, Shep pointed out that “Larry (Ellison) has always wanted an operating system so as to better compete with Microsoft and IBM.” 

Will this move help Oracle sell more database software, middleware, and applications? It may make Linux more appealing to Fortune 500 companies. The hardcore open source zealots are filling up blogs with anti-Oracle rhetoric. Will buyers pressure Oracle to add open source databases and application servers? These questions were asked at the press conference. As one might guess, Oracle made no commitments.

A pre-emptive strike on Microsoft Vista?

On the flight back to Boston, I began to wonder whether the Oracle move might be a pre-emptive strike on Microsoft’s soon-to-be-delivered Vista. Ironically, Microsoft’s Steve Ballmer was also in San Francisco making the rounds of Bay Area newspapers talking about the new operating system. There may be something to this.

Is SAP the real target?

When I landed in Boston, I had an e-mail from a long-time client, a software executive whose company works with Oracle, SAP, and Microsoft. I had asked him what he thought of the Oracle news and whether it may be aimed at Microsoft. I think you will find his comments to be insightful. Here is his response:

“I think the Oracle Linux announcement is brilliant. It could be viewed as a pre-emptive Vista strike, but I think Oracle soft-peddles it because they want to pick a fight with SAP. There is still cooperation between Oracle, IBM, and MSFT (Microsoft’s stock symbol) for now; but Oracle is doing a nice job of positioning themselves in the war of  ‘the stack.’ This helps them sell apps (high value growth component) in the long run. While SAP continues to believe it can build everything, Oracle will pass them by.

MSFT in Vista is trying to bundle SQL Server, search, SharePoint, on an operating system, starting with the operation system. MSFT appears to be content with this, because they have no clue how to deal with applications/solutions.

Oracle is doing the same thing from the opposite end of the spectrum, starting with DB to operating system. Oracle’s App strategy will help them when you total things up. They appear to be going for it all.”

What do you think? Who is the target—Red Hat, Microsoft, SAP, or all of the above? 

Next week, we will look at Oracle’s plans to create a “new user experience.” We will also profile Axentis, a leader in providing compliance support via software-as-a-service (SaaS). The company has quietly and quickly built a 700,000 user customer base.