Update: Red Hat responds here.

Oracle chief executive Larry Ellison has said that his company will offer support for the Red Hat Linux distribution. Ellison claims that a lack of enterprise support for Linux has slowed the adoption of that OS, and that increasing the adoption of Linux in the enterprise will only happen if proper support is given. Red Hat support customers will be able to easily and quickly switch from Red Hat support to Oracle support.

Oracle also plans to clone Red Hat's Linux based on the source code produced by the company, as opposed to creating their own Linux distribution. Ellison has vowed that software certified for Red Hat's Linux will still work on this clone.

"If your application runs on Red Hat today, that application will run unchanged when you're getting Oracle support," Ellison said. "It's very important not to fragment the Linux market. Every time Red Hat comes out with a new version, we're going to sync our version with that version. All we add is bug fixes."
Ellison has long promised that Oracle would one day surpass Microsoft as the number one software company in the world, and Linux is obviously a part of that strategy. But what will come of this? Will Oracle ultimately take Red Hat over? By offering a better product at a lower price, will Oracle drive customers away from going to Red Hat for support - business that Red Hat depends on to survive?

Red Hat shares fell nearly 11 percent to $17.40 in extended trade from a Nasdaq close of $19.51 following Ellison's announcement. Oracle shares rose slightly to $18.71 in extended trade from a regular-session closing price of $18.62.