Linux red hat underground

Linux fuels Red Hat's red-hot rise - operating system vendor

Influencial OS vendor emerges in open source

They sit clustered like a small band of rebels at the back of the room, on the lowest floor in the Jacob Javits Convention Centre in New York. Here, at the annual PC Expo, they are set amid the smaller companies, the unknowns and the startups that are fighting to join Microsoft and Compaq on the top floor where the trade show traffic is thickest. They are the Linux companies, and in a way it makes sense that they should be here. This is the operating system at the forefront of the open source revolution, after all, an underground movement if ever there was one.

Linux is probably the only piece of source code, with the possible exception of Java, to inspire dreams of conquering software giants like Microsoft among developers and vendors. But unlike Java, which was created by University of Calgary student James Gosling and then championed by Sun Microsystems, the brainchild of Linus Torvalds has grabbed high-tech headlines seemingly on its own. This has been the OS's strength as well as its Achilles' heel. While some MIS managers like working with an operating system whose bugs are detected and fixed in chat rooms rather than depending on Microsoft tech support, some CFOs have been concerned about a product that runs without the backing of a corporate entity. With all the talk of kernels and code, Linux sometimes seems as intangible and uncontrollable as the Internet from which it was born.

That is, until now. For all the unknown names and faces that littered PC Expo's first-ever Linux Pavilion, there was a common icon glowing on nearly every vendor's monitor, the same image that runs a full-page ad on the back of publications like Linux Magazine and Linux Journal. If you've read about the OS, you've probably seen it before. The shadowy face, backed by a black circle. The fedora, tilted at a rakish angle, splashed with scarlet. Red Hat Software, the favoured face of Linux.

It's inevitable, perhaps, that out of the handful of companies which package a version of the free source code - Debian, Slackware and Caldera are the notable rivals - one market leader would emerge. But Red Hat's rise has been quicker than expected, and it's worth looking at what the long-term implications could be for the future of open source if its star burns any brighter.

Last month, for example, Research Triangle Park, N.C.-based Red Hat became the first Linux-oriented company te file with the U.S. Securities and Exchange Commission to become a public company. The June 4 filing did not indicate how many shares Red Hat would sell or how much the shares would fetch on the stock market, but its maximum proposed price is US$96 million. That's not bad for a company, which, according to research from International Data Corp., holds 54 per cent of the market in terms of all Linux revenues last year.

The benefits don't end with Red Hat, however. Vendors at PC Expo admitted their debt to the company in more ways than one. "If it wasn't for their name and exposure we wouldn't be nearly as successful as we've been," says Larry Bernstein, sales manager with Enhanced Software Technologies (EST) from Pheonix, Ariz. EST markets the Bru backup and restore utility for Linux, and he says that while the product is optimized for any commercial distribution of the operating system, the lion's share of his customers fall into a close race between Red Hat and Caldera. "There are some companies that don't even know about us, but when you mention Red Hat, suddenly they want to talk to you," he says.

The same goes for Atipa Linux Solutions, a reseller of white-box workstations based in Joplin, Miss. "We support it," the company's Brandon Fuhr said of Red Hat's IPO. "It helps more people to find out what Linux is about, and that's good."

Sure it is - in the short term. Indeed, Red Hat's combination of luck and timing has obviously helped other vendors feel comfortable about supporting Linux. IBM, Hewlett-Packard, Oracle and SAP AG all have products or services that have led to partnerships with Red Hat. Dell is pre-installing Red Hat Version 6.0 in some of its machines. Intel Corp. recently made an investment in Red Hat worth five per cent of the company.

But in its bid to become publicly traded and grow the market, what's te stop Red Hat from becoming just as prone as Microsoft te allegations of monopoly and unfair competition? Well, there's the size of the market for one, which some analysts have pegged at US$34 million worldwide compared to US$5.9 billion for Windows. Others might argue that since the core of Linux - the kernel - is free, it should be impossible for one player to dominate the rest.

But let's get real: there is much more to the success of an operating system as a commercial product than the kernel at its source. BASIC, DOS and eventually Windows got where they were through relentless marketing, strategic alliances, innovative upgrades and an ability to adapt to market needs. All of these are traits which Red Hat shares. In an interview last year, Red Hat CEO Bob Young told CDN his corporate strategy has always been something of a work in progress.

"To be a successful entrepreneur you really have to stay a) close to your customers and b) have to stay very flexible with what your mission is," he said. "If you start a business in your garage and you're not flexible - if you're really focused on your business plan and nothing's going to distract you from it - and if it turns out your business plan isn't particularly appropriate for the market at that time . . . well, you basically bankrupt yourself."

In the shadow of Microsoft's antitrust trial the industry has been seeking - some would say rooting - for a potential alternative vendor. At the same time, corporate technology needs have become more complex with the advent of mobile computing, intranets and information appliances. Red Hat has thrived with a cheap OS that is robust yet can be customized to accommodate its large clients like Boeing and NASA.

But with such a moderately priced product - some versions sell for as little as US$80 - Red Hat is naturally leaning towards providing more of the sorts of services resellers have been exploring since the fall of hardware margins. Add to that Red Hat's considerable influence in the market, and you have a seriously competitive player. Last year a pair of software companies tried to forge a Linux Standards Association which Red Hat did not support, and which has since gone nowhere in terms of attracting members. EST's Bernstein, meanwhile, ruefully admitted that Red Hat is no longer bundling full versions of its utility. "They don't want to be tied to any one partner," he said. At PC Expo, one reseller was overheard grumbling, "They're becoming a standard, and that I don't like," he said. "I know, I know, it's a free operating system, but . . ."

He left the sentence unfinished, and perhaps that's because Red Hat's story is just beginning.