Barry, Article...Challenge To Microsoft's DOS Rule...
September 30, 1998
NEW YORK - The Associated Press : Red Hat Software Inc., an upstart challenger to Microsoft Corp.'s Windows operating system, on Tuesday grabbed the financial backing of Intel Corp. and Netscape Communications Corp., two of the biggest names in the high-tech business.
While Red Hat's software for running computers is relatively obscure, the two minority stakes drew the attention of Microsoft and rivals who accuse the software giant of trying to muscle the competition to protect its monopoly in desktop operating systems. It also represents a potential new rift in the informal alliance between Microsoft and Intel, whose microprocessors supply the brainpower for 85 percent of the world's personal computers.
Red Hat chief executive Bob Young said the companies reached agreement Tuesday. He declined to give details, noting Red Hat is privately held. But he said the backing should help his company meet its goal of doubling its revenues, which ranged from $5 million-$10 million last year.
Even more important than money, said Young, are the new relationships with Intel and Netscape, which makes software for browsing the World Wide Web.
''These two players are clearly leaders in the field,'' said Young. ''Their investment indicates the strength of Linux's momentum.''
During the past year, Linux has risen to the forefront among the relatively unknown products that can substitute for the Windows software program. Distributed free over the Internet or sold in a commercial version for $50, the system has an estimated 8 to 9 million users worldwide, who prefer the flexibility of the system.
Red Hat offers a service to Linux customers that Windows doesn't: Sharing the source code over the Internet, which makes it easier to blend in improvements.
Clay Ryder, an industry analyst at Zona Research, Inc., in Redwood City, Calif., said that while Linux is a true competitor of Windows and Windows NT, it's important to keep the deal in perspective against Microsoft, the world's most successful technology company.
''Even if Red Hat doubled next year, tripled, it's almost a rounding error to Microsoft,'' he said.
By comparison, Microsoft's Windows and Windows NT operating systems have about ten times as many users.
At Microsoft, enterprise marketing group manager Edmund Muth said they are closely watching Linux's growth.
''We take all competitive threats seriously, and we number Linux among those competitive issues,'' he said.
But Muth said Intel's investment ''does not affect the strong and postitive relationship that our two companies enjoy.''
Neither Intel nor Netscape would discuss details of the investment. Young disclosed the deal after speaking on a panel with Netscape co-founder Marc Andreessen, Intel's corporate vice president Sean Maloney and Linus Torvalds, creator of Red Hat's Linux operating system at a trade show in San Jose, Calif.
George Weiss, an industry analyst at Gartner Group in Stamford, Conn., said Intel's interest in a company directly competing with Windows ''is a little weird if you think that Intel and Microsoft are bedfellows that are tightly coupled in marriage.''
But Weiss said that relationship has been overstated. Recently, for instance, Santa Clara, Calif.-based Intel began licensing its technology for advanced video software to RealNetworks Inc., which competes with Microsoft.
Tuesday's deal could give more ammunition to Microsoft critics who are closely watching the Justice Department's antitrust lawsuit against the company, which goes to trial Oct. 15.
In June, for instance, consumer activist Ralph Nader pointed to Linux when urging the Justice Department to make sure Microsoft allows computer makers to sell machines with system software other than Windows.
Nader has been a proponent of Linux, installing the software on the computers at his Washington-based Consumer Project on Technology.
A Nader spokesman, Jamie Love, said he was delighted about the new backing and that it could help popularize the operating system. |
