Red Hat has announced it has signed a definitive agreement to purchase privately held Linux developer WireSpeed Communications, a developer of software for embedded systems.
Red Hat is acquiring WireSpeed because of its development of network and telecommunications components for embedded systems software for semiconductor, Internet device and industrial control companies. The addition of WireSpeed will make Red Hat the leading source of custom Open Source development expertise.
"It is clear to analysts that we're going to see an increasing use of intelligent devices, whether mobile phones, personal digital assistants (PDAs) or set-top boxes. It is also fairly clear that one of the biggest opportunities for Linux is to be the software in those devices," said IDC analyst Dan Kusnetzky. "Red Hat wants to lead the charge in that direction and has acquired a company with tools for that."Under the terms of the agreement, Red Hat will issue 1,531,232 shares of Red Hat common stock in exchange for all the outstanding securities of WireSpeed.
The addition of WireSpeed to Red Hat's Client Services Group, which is a source of custom Open Source development expertise in embedded, networked and post-PC devices, will help Red Hat continue to meet the demand for embedded development, the company said. Red Hat also expects the acquisition to drive up revenues from the custom development of embedded Linux.
"Red Hat has a recognisable brand and has been careful" not to alienate the Open Source community, Kusnetzky said, adding that "Red Hat has done a good job of walking a fine line . . . making sure it's perceived as a member in good standing of the community". Red Hat needs to do this, according to Kusnetzky, because if they want support from the community, they need to have a good standing in it. The Open Source community is sometimes unpredictable with regards to companies making money off software they developed, he added.
This acquisition "will help the Linux market move forward... [but] there is always the threat that Linux will lose [opportunities on intelligent devices] to some other environment that is more mature," Kusnetzky said.
Matthew Szulik will remain president and chief operating officer for the combined companies, and Red Hat expects the board of directors to remain intact.
The acquisition of WireSpeed is expected to be completed by July 31, subject to customary closing conditions.www.redhat.com www.wirespeed.com