Till now there was a relatively less competition in the Linux sector for Red hat , which is considerd as a celerbated leader in the open source software market but a single move by the Oracle which is also a celebrated leader in the database software market is going to be lethal for Redhat.
Raleigh based Redhat distributes open source Linux for free and it does not seek money from this .The comapny makes money by selling services and support.
Now the problem for Redhat starts when Oracle CEO Larry Ellison recently announced that their company will provide the same services and support for the Redhat's products at a 50% discount.
Market react on this suddenly , Redhat's shares tumbled 24% after this news. As the organisation of Oracle is vastly superior Redhat had to change their business model to overcome this situation. Few experts say that even Redhat will not be able to survive to this aggresive move of Oracle.
They have reasons for it, california based Oracle is a $14.4 billion company in comparision to $278 million of Redhat according to last year results. Oracle have 7000 employees in support service alone while Redhat is having a total of 1,800 employees.
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