BOSTON (Reuters) – Linux software distributor Red Hat Inc. will not cut prices even though bigger rival Oracle Corp. is launching similar services for half the price, Red Hat’s chief executive said on Friday.
CEO Matthew Szulik made the comments to cable channel CNBC a day after Red Hat’s shares plunged 24 percent because Oracle Chief Executive Larry Ellison said he hoped to win over some of the smaller company’s business by offering steep discounts.
Szulik said he welcomed the competition and that Red Hat would continue to work with Oracle to sell products alongside Oracle databases and software designed to work on the Linux operating system.
“We’ve had a very productive seven-year relationship with Oracle,” Szulik said. “We want to make sure our products perform very well with Oracle.”
Red Hat, the No. 1 distributor of Linux, sells standardized versions of the open-source operating system, along with upgrades, maintenance and round-the-clock technical support.
Ellison said late on Wednesday his company would offer technical support at half the price to businesses that use Red Hat’s version of Linux, raising the specter that Red Hat could lose substantial market share.
“The 2,000 men and women from Red Hat are prepared for this,” Szulik said of the challenge posed by Oracle.
Oracle, with revenue expected to top $17 billion in the current fiscal year, dwarfs Red Hat, which analysts expect to post annual sales of about $400 million.
Red Hat shares were recently quoted at $14.98 in premarket electronic trading on Friday, slightly higher than their Thursday close of $14.83.