Oracle Corp. executives have finally revealed the names of 26 enterprise-class customers that have gone with that...
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company for their Red Hat Linux support needs. However, the number of customers in that list doing wholesale migrations to Oracle's brand of Linux is much smaller.
Only the International House of Pancakes is on the record saying Oracle Enterprise Linux completely replaced Red Hat in its data center. In a statement, IHOP CTO Patrick Piccininno said the switch from Red Hat to Oracle Enterprise Linux "couldn't have been easier."
Yahoo was previously on the Red Hat-to-Oracle Linux migration list, but that migration was later revealed to be only a partial migration by Yahoo executives. Monica Kumar, Oracle vice president of open source product marketing, defended Oracle's actions and said Oracle Linux had replaced RHEL on some of Yahoo's servers and could be considered an example of displacement.
"This is about terminology. We believe we have displaced Red Hat in many implementations," Kumar said. "Many of the customers that have come to Oracle for Linux support are Red Hat customers, and to us that is displacement." Kumar conceded this meant Oracle was not displacing Red Hat completely in the new list of 26 customers.
More significantly, Oracle is now supporting Linux deployments that are not running Oracle applications, Kumar said. Of the 10 customers quoted by Oracle in a press release, only four were using Oracle software on Linux.
Oracle traction with each renewal cycle
But even though the number of full-fledged Red-Hat-to-Oracle Linux migrations was light in this series of Oracle customer wins, The 451 Group's senior analyst Raven Zachary expects that to change soon. "The primary candidates for early adoption are existing Oracle customers that are deploying Oracle databases on Red Hat Linux and Red Hat customers that are dissatisfied with Red Hat's pricing or service," Zachary said.
Over time, Zachary expects Oracle to expand beyond these early adopter categories.
"The other point to remember is that the customer acquisition opportunities are going to be tied to the Red Hat contract renewal cycle," he said. "We're only a few months into the offering, and I suspect that customers will be testing out Oracle's support offering on a set of servers before considering a full replacement of Red Hat."
Red Hat pricing
The first customers to buy support from Oracle for their Linux server deployments did so in December at the conclusion of a 90-day free trial, said Oracle's Kumar.
Around that time, a research report from Pacific Crest Securities Inc. showed that approximately 64% of Red Hat customers said a support discount was a "very important" part of the decision-making process when evaluating their relationship with Red Hat.
When customers were asked what kind of discount Red Hat would have to provide to keep their business, one-third said they would need an Oracle-like discount of 50% to 74%. Thirty-seven percent of Red Hat customers said they wanted a discount of 25% to 49%, and 27% said a cut in costs from 1% to 24% would be adequate.
Zachary has speculated that Red Hat's new one-page SLA could be the beginning of a revamp in support and pricing. During Red Hat's recent quarterly earnings, however, CEO Matthew Szulik said the company has no plans to change its pricing in response to the Oracle Linux.
Kumar said she expects Oracle to have successfully cloned and tested RHEL 5 "in a few weeks." Oracle is currently testing its next release, Oracle Enterprise Linux 5, using real-world customer workloads as well as its own internal IT workloads. Once that is done, customers will be able to deploy Oracle Enterprise Linux 5 and get enterprise-quality support from Oracle through the Unbreakable Linux Support Program, she said.