Yankee Group research fellow Laura DiDio estimates Red Hat already owns between 75 percent and 80 percent of the commercial open-source distribution market.

"If Oracle's going to do it, they need to get product out before Red Hat runs away with the race," DiDio said. "Unless they have a secret lab somewhere and they've been building and testing a complete stack for the past two years, they need to buy into the space this year."

A Linux distribution stack would do a lot for the company, said DiDio, as 80 percent of Linux databases already run Oracle.

Oracle has the financial power to make the deal. The company posted solid financial quarterly earnings and revenue gains boosted by increased demand for its traditional business applications. Last week, Oracle posted a profit of $1.3 billion for the fourth quarter, ended May 31, and revenue rose 25 percent to $4.85 billion.

DiDio said Oracle has $7.76 billion cash on hand, $5.89 billion debt, and $77.35 billion market capitalization. This compares with Novell's $1.34 billion cash on hand, and approximately $600 million in debt, and $2.24 billion market cap. "Red Hat has twice the market cap of Novell with one quarter of the sales," she said, granted Novell sells other products. "Red Hat's profit margin is nearly 29 percent."

Red Hat's market capitalization currently stands at just under $5 billion compared with Novell's current market capitalization of $3.03 billion. As for the technology, Novell has a solid management and migration offering in the legacy ZENworks product suite. And although eDirectory now lags behind Microsoft's Active Directory in terms of performance and functionality, DiDio said, it's superior to Red Hat's iPlanet directory service.

Finally, Novell and Oracle have had a close and often mutually beneficial working relationship for nearly two decades. DiDio said if a Novell acquisition isn't in the cards, Oracle has an abundance of alternate niche market Linux and open source firms that it could purchase. Possible acquisition targets include Mandriva (a France-based Linux distributor), Turbolinux and Ubuntu.

"There isn't a cookbook you can turn to that says now is the time, but companies do it because they can potentially drive considerable involvement from developers to grow deployment of the applications or business long term," said Paul Salazar, senior director of marketing at SpikeSource Inc. "For a company like Oracle, it will give them new ways to compete."

The upside for Oracle buying rather than building its own Linux stack is that it would gain an immediate open source community and installed base of its own. This would save Oracle valuable development dollars and accelerate its time-to-market.