No sooner had Oracle CEO Larry Ellison announced the software giant's plans to slug it out with Red Hat in the enterprise support market, shares of the Linux software and services provider began sinking faster than ratings for Studio 60.
By midafternoon Thursday, Red Hat stock was down 26 percent, to $14.31, from Wednesday's close. It had been as low as $13.70 shortly after trading began, bounced a little and has flatlined ever since.
Of course, the reason investors are dumping Red Hat shares is because they think Oracle will mop up the enterprise floor with the much smaller player. Indeed, the technology graveyard is full of companies that gained an early edge in a market, only to be crushed by a larger competitor with more resources.
Is that Red Hat's fate?
Ellison doesn't necessarily think so, or at least he says he doesn't think so. From Andy Patrizio's internetnews.com article:
One of the first questions asked during a Q&A with the audience of corporate customers was "Is killing [Red Hat] an unintended side effect?" Ellison responded "I don't think Red Hat will be killed, I would expect Red Hat is going to compete very aggressively. This is how capitalism works. We're competing. We expect them to improve their product."
There is another likely scenario. Many small companies, as we know, build themselves from Day One with an eye toward eventually "merging" (code for being acquired) with a deep-pocketed partner.
That could be the end game for Red Hat. Whether the "partner" is Oracle or another giant, such as Microsoft, well, that's where the real fun begins.
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