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Red Hat on “collision course” with Oracle and IBM, says Goldman

Tash Shifrin

Linux supplier Red Hat’s $350m (£205m) acquisition of open-source middleware firm JBoss will put it on a “collision course” with Oracle and IBM, analysts have warned.

A report by analysts Goldman Sachs says the move heralds a shake-up of the software market. “Red Hat's acquisition of JBoss begins Red Hat's migration up the infrastructure software stack and leads it into direct competition with Oracle and IBM, two important partners of Red Hat,” the report says.

“The JBoss acquisition is a catalyst event, signaling a fundamental market repositioning for Red Hat and recent comments from Oracle confirm our concern that Oracle now views Red Hat as a competitor,” it adds.

The report follows news that Oracle is considering launching its own Linux distribution. Oracle chief executive Larry Ellison told the Financial Times newspaper: “We are missing an operating system. You could argue that it makes a lot of sense for us to look at distributing and supporting Linux.”

The firm had considered buying Novell, the second-largest Linux distributor after Red Hat, he added.

Ellison acknowledged the impact of Red Hat’s acquisition of JBoss in prompting a fresh look at relations between the companies. “Now that Red Hat… competes with us in middleware, we have to re-look at the relationship – so does IBM,” he said.

Goldman Sachs downgraded its investment rating for Red Hat from “in-line” to “underperform” in the wake of Ellison’s comments.


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