Goldman Sachs sees Red Hat on a 'collision course'

Red Hat's planned acquisition of open-source application server provider JBoss -- announced last week -- puts the Linux vendor on a "collision course" with two of its most important partners, Oracle and IBM, according to a Wall Street analyst report Monday.

The Goldman Sachs report says the dominance Red Hat Linux among North American business users along with the coming purchase of JBoss - a rumored acquisition target of Oracle's - is now stirring the two large enterprise software vendors out of their on-the-sidelines stance.

"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," wrote Rick Sherlund, a Goldman analyst.

IBM and Oracle had long supported Linux as a way of combating Solaris Unix vendor Sun Microsystems and the rising, lower-cost player, Microsoft. But doing so helped launch Red Hat's logical ambitions to start acquiring related technologies to offer all-in-one packages, which corporate customers prefer, wrote Sherlund. He also predicted that Red Hat will buy an open-source database and/or tools applications to round out its offerings.

The report follows an interview today in the Financial Times where Oracle chairman and CEO Larry Ellison disclosed his ambitions to either build or buy a Linux distributor as the foundation of a complete stack of open-source infrastructure software. Ellison said he considered buying Novell, but not Red Hat because it was too expensive.

The combination of the Goldman report and Ellison's comments hit Red Hat's stock price, which fell more than 7 percent in mid-afternoon trading. The company still has a market capitalization of about US$5 billion, versus about US$3 billion for Novell.

Besides Novell's SUSE Linux, other distributions of Linux that Sherlund named as potential Oracle targets include Debian and Ubuntu.

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