Linux effort Oracle shows no momentum in

Oracle Corp. promised
to take the Linux software world by storm last October, but the
major expansion by one of the world's largest software
companies so far has failed to show momentum..

BOSTON - Oracle promised to take the Linux software world by storm last October, but the major expansion by one of the world's largest software
companies so far has failed to show momentum.

Tiny rival Red Hat Inc., which over a decade built a services business around Linux and legitimized the free, cooperatively developed operating system for corporate computing, has survived the onslaught and even grown.

It is still early days, but Oracle has not disclosed any major deals, and Wall Street remains cautious on the future ofSo far some major software companies are on the sidelines, declining to guarantee that products designed to run on Red Hat Linux will also run on Oracle Linux -- which Oracle says is identical. That means customers cannot be sure that software built for Red Hat Linux, such as big database programs, will be supported when run on the Oracle version.

"Oracle's Linux is not certified. It's not tested," says Mark Murphy, an analyst with First Albany Capital. "It might be buggy. There's just no telling how horrible this Oracle offering could be."

Some investors had feared Oracle's launch might do quick damage to Red Hat, whose major customers include Amazon.com, Merrill Lynch, DreamWorks and Goodyear.

While that hasn't appeared to have happened, analysts say that Red Hat can't dismiss the Oracle threat. Business software products are rarely overnight hits, and Oracle is unlikely to have a shot at much of Red Hat's existing business until Red Hat's current contracts expire.

"Anybody that expected Oracle to start sticking it to Red Hat right away doesn't understand the time it takes to actually introduce a product," said Cowen & Co. analyst Peter Goldmacher.

And Oracle, the world's No. 3 software maker behind Microsoft and IBM, has plenty of financial resources, marketing experience and technical know-how to draw on. It had US$14.4 billion in sales and US$3.4 billion in profit in its most-recent fiscal year ended in May 2006.THIS IS CAPITALISM'

The company's chief executive, Larry Ellison, promises to be an aggressive adversary.

"What happens to Red Hat? Is killing them an unintended consequence?" an audience member asked Ellison in October when he publicly announced his plan for Oracle Linux.

"This is capitalism, we are competing," answered Ellison, one of the technology industry's most outspoken executives.

But so far that bravado has not translated into substantial sales, industry analysts believe.

"I don't see (Oracle Linux) becoming a volume business in the near term or threatening Red Hat," says Stephen O'Grady, a software industry analyst with market researcher RedMonk.

Red Hat reported that it added more than 12,000 new customers in its most-recent quarter.

One of Red Hat's key marketing points has long been a certification program by which other software makers promise their products will work smoothly with Red Hat Linux.

Oracle participates in that program, certifying that its databases, for instance, will work with Red Hat Linux. IBM, SAP AG and many others also test
compatibility of their software prior to product releases and
promise quick fixes of bugs.DEMAND FOR CERTIFICATION STILL LIMITED

Officials with IBM and SAP said in recent interviews that they haven't extended their Red Hat certification to Oracle Linux. Both companies said they would consider certifying the product if customers request it, but they said that so far there has been little demand.

Another key challenge for Oracle is winning endorsements from customers who are using the software, an important selling point for potential buyers.

Oracle's website includes a list of seven information technology executives preceded by the phrase, "Customers of all sizes across a variety of industries are embracing Oracle Unbreakable Linux."

Reuters attempted to contact all seven. Five responded, but only one, restaurant chain IHOP, said it is using Oracle Linux. The other four said they were using other products, including Red Hat.

Alcoa North America Chief Information Officer Kevin Horner, for example, is quoted on the site as saying that "Alcoa runs mission-critical systems on Linux...Having a real choice is a positive."

But he said by email that Alcoa North America doesn't use Oracle Enterprise Linux. "We have a contract with Red Hat and we are pleased with the service we get," he said.