Red Hat jumps into M&A: Is the $350m deal defensive or aggresive?
By Tom Foremski - April 11, 2006
Red Hat's acquisition of open source company JBoss on Monday was a big surprise because Oracle was the one that all my sources told me was the purchaser. Maybe the price was a bit steep for Oracle at $350m?
One interesting thing about this acquisition is that private valuations of open source companies have reached very high levels--much more than comparable companies in the public sector. The other interesting aspect of this deal is the potential emergence of RHAT as a major force in the software business.
This was clearly a strategic acquisition and it is part of the software vendors racing to build an enterprise stack of operating systems, middleware, and e-commerce applications. Red Hat now has the operating system and a good middleware application server. All open source, but it's not really about open source it is about: The Enterprise Stack. You've either got it or you don't. You, the customer, will be paying a monthly stack fee whether it is open source or not--you are paying for the maintenance and hosting.
So who will be the first with a one-price-one-bill enterprise stack? Who will be the acquirer, who will roll-up the enterprise stack? Could it be Red Hat? Could it be Ingres? Oracle will certainly continue with acquisitions, and Sun Microsystems is another competitor, not to mention IBM, SAP, Computer Associates, Symantec and Microsoft.
The way things are going, everyone is heading into this from different market positions. And they are trying to preserve their own business model while trying to commoditize the business model of their competitors.
That will be interesting to watch.
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Dave Dargo, the CTO of Ingres has a lot of insight into the software market, especially the open source movement from his previous job at Oracle, where he built the unbreakable Linux platform. He recently started a blog:http://blogs.ingres.com/davedargo
This is from "White Knight or Strategic Investor?" Dave Dargo's analysis of the Red Hat deal.
Well, it happened. It wasn’t Oracle, thankfully, in my opinion. It was Red Hat, but was Red Hat being a white knight and saving the open source world or were they making a smart, strategic investment. I think it’s a little bit of both with a heavier emphasis on the strategic investment.
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April 11, 2006 | Permalink | Comment | Category: Enterprise IT | Subscribe to SVW
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