Red Hat ready for duel with Microsoft

Red Hat ready for duel with Microsoft

As the chief executive officer of Red Hat Software, the leading distributor of the Linux OS, Bob Young is at the forefront of an open-source software movement that gains momentum on a daily basis. Michael Vizard talks to Young about the trends fuelling the adoption of open-source products and the role he sees Red Hat playing in the open-source revolution.

IDG: What is driving the Linux phenomenon?

Young: It relates very much to the PC. When the PC came out, it was pretty much a toy. But it sold because by splitting the hardware away from the OS, you suddenly could buy your first machine from IBM, your second from Hewlett-Packard, your third from Compaq. And you could buy your parts and peripherals from one of several hundred if not thousand suppliers. It was getting control over hardware purchasing that drove the marketplace.

Of course, what happened is Microsoft came in and scooped [up] control over the operating system. But the market didn't care very much because the bulk of the dollars were in hardware.

Today Microsoft has, of course, increased the price of their operating systems in absolute and relative terms to the cost of the hardware. What we're saying is that the operating system space is an overpriced market segment. We're convinced we can change the model of operating system design.

What applications are specifically driving Linux adoption?

The two real killer apps are networking and Web serving. [Windows] NT is the most popular operating system on the Net, running at 22 per cent market share. What's fascinating: Linux is the second most popular, at 21 per cent. In other words, the best that Microsoft can do, with all of its marketing dollars and visibility, is basically tie [with] an operating system that's coming from a bunch of relatively small companies.

But the real impact in the corporate space will be from the announcements you saw last fall from Oracle, Informix, and IBM. Those products are only beginning to ship today. An operating system with momentum gets into this virtuous cycle that's almost impossible to stop.

What makes you think the Linux community can really compete with Microsoft?

We are working with a development team that is several times the size of the team that Microsoft could afford to build. It's just a remarkable phenomenon. Because of efficiencies of scale, the little guy usually has a hard time keeping up.

In this mode, we've got a better efficiency of scale. We can produce technology at a lower cost than Microsoft can. And the problem with the Windows platform is that Microsoft has all this legacy code that they have to drag forward with them from release to release. We build more reliable technology. We build phenomenally sophisticated technology. And we do it at a small fraction of the cost of the proprietary binary-only model.

If you're able to compete effectively against Microsoft, what's the point of the Department of Justice case against Microsoft? Is it relevant?

It's relevant only in the sense that someone has to police monopoly owners. Otherwise, it's the phenomenon of walking down the street and you have to give your wallet to the big burly guy walking the other way down the street.

Without a DOJ policing the marketplace, Microsoft with their monopoly on the desktop, can very easily leverage that desktop to achieve monopolies in other spaces. So in that sense, we're very supportive of what the DOJ is doing.

Having said that, where the operating system stops and an application begins is a very grey area, and we're quite willing to acknowledge that's a problem. I have to admit I'm not as supportive of the bundling case as I am of the business-practices case.

What is the relationship between the Linux community and the traditional suppliers of Unix?

They're [Unix suppliers] all looking at Linux after initially seeing it as a potential threat. They now recognise [that] what's happening is we're not stealing business from Sun; we're stealing business that Sun already lost. And because we're an independent vendor, customers still benefit from splitting the operating system from the hardware vendor.

When you look across the market today, there are quite a number of Linux distributors. How will vendors compete if they are all selling versions of the same thing?

All the Linux distributors are building the same four-door passenger car because they consider that that's where the centre of the market is. But someday in the future, you're going to see various Linux distributors target specific market segments.

What differentiates Red Hat today?

We're offering a key benefit that stems from the two oddest idiosyncrasies of this whole thing, which are that we ship complete source code and we ship it under a licence where you don't even have to ask our permission to make modifications to it. Those two features translate into the key benefit, which is control over the operating system layer in the computers that you're shipping or the computers you're using if you're the customer.

Is there room for vendors that bundle Linux with products that don't have open-source licences attached to them?

Our perception is that the reason that Slackware and Debium are the second and third most popular versions of Linux behind Red Hat is because they're also delivering the same control benefit to users.

The problem with other, smaller commercial Linux vendors is they look at Linux and they see a broken economic model. Great technology, but a broken economic model. So what they do is, they take Linux and surround it with proprietary tools.

The problem is, from a support and bug tracking issue, you've effectively just bought another proprietary binary-only OS.

So how will Red Hat make money with its model?

If you look at the customers today, they're all the early adopters. What we're doing, with the support of the IBMs, Hewlett-Packards, Compaqs, and Dells, is responding to their customers who are asking for this stuff. When we ship Red Hat Linux, we typically ship 450 different packages, of which Red Hat builds and maintains about 35. As we get into the enterprise space, the user wants a single source of support.

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