An interesting development. Oracle has announced they will be selling and supporting their own distribution of Red Hat, with base prices lower than those offered by Red Hat. This is perfectly legal, of course, as long as they follow the rules respecting the trademarks and copyrights associated with Red Hat's logos and names. It's already done by CentOS, which offers an “upstream” version of a well-known branded distribution. This is one of the points of Open Source: building on the works of others. The licenses make it clear that while you can build, you can't steal; many licenses require you share back your improvements you make, improving the lot of everyone.
I'll be interested in hearing how this works out. I don't know if it will prove economically feasible to Oracle. I applaud their innovation.
Others don't see it this way. Steven J. Vaughan-Nichols decries “Oracle's Red Hat rip-off: “Here's the truth of the matter. Red Hat does a darn good job of supporting its Linux, and charges a fair price for it.” I think that's true, and I think it will be borne out by the marketplace: some big Oracle shops may switch to “Oracle Unbreakable Linux” (hah!), but most shops will be more comfortable staying with the Red Hat vendor they know. And trying to undersell Red Hat on price? Oracle customers are generally not thought to be too price-conscious.
Time will tell. I see it as another endorsement of Linux as a valid platform for mission-critical line-of-business applications. That's a win.