Is Red Hat ripe for Acquisition by Oracle?

With Oracle on a spending spree, Dr. Tim Hall notes that Red Hat’s recent troubles might make Red Hat ripe for acquisition.  Tim cites this article with the sensational title Rattled Red Hat Battles Support Impostors . 

Even though this is a British periodical (British papers are notorious for publishing exaggerated stories), there may be grain of truth that North Carolina-based Red Hat is feeling the pinch of the tough economic times and competition from Oracle Enterprise Linux, a Red Hat impostor:

"Though they were launched with great fanfare, Oracle's service and its Linux distro haven't upset Red Hat, and last year, Ellison was notably muted in his assessment of both.

Ellison talked like a middle-aged mum, not his usual Alpha male self. He said he was "very, very proud of where we are today" with 4,000 customers. "Uptake of Oracle Enterprise Linux has been better than we anticipated," he claimed.

Despite Oracle, Red Hat has managed to defy gravity and convince customers to keep signing the checks. Its third-quarter results saw revenue increase 18 percent to $194.3m, while revenue from subscriptions grew 21 percent to $164m.”

Personally, I don’t believe that Oracle would want to buy Red Hat since their own Linux distribution has seen lackluster adoption from the marketplace. 

In late 2009, Oracle hung their customers out to dry with lousy Oracle support, and as an IT manager myself, I would be leery of adopting any product that has had so many complaints from their own user community.  If Oracle wants to buy Red Hat at all, it will be to get their support services, something that Oracle has a very poor track record:

- I was stunned at how badly the migration was implemented.

- Incredibly bad service.

In sum, Oracle may continue their buying spree, just like Computer Associates did in the late 1980’s, a strategy that ultimately blew-up in their face and created a class of people who vowed never to use CA products again.  While Oracle may be cash rich now, it could all end overnight as they alienate their customers the way that George Wang did with IDMS database users back in the 1980’s.