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LinuxStockNews: Open Source Commentary (July 17, 2000)

Jul 17, 2000, 11:58 (0 Talkback[s])

WEBINAR:
On-Demand

Re-Imagining Linux Platforms to Meet the Needs of Cloud Service Providers


"We have seen much change within the Linux sector as the operating system is beginning to achieve legitimacy in the business world. Since the original distribution companies such as Red Hat (NASD: RHAT), TurboLinux (private) and Caldera (NASD: CALD) started distributing Linux, major companies such as IBM (NYSE: IBM), Compaq (NYSE: CPQ) and Dell (NASD: DELL) have joined in, offering support services, hardware and software for these distributions. At this time, it is becoming clear that the large technology companies have begun to dominate the sector, offering robust products that larger businesses are beginning to show interest in. Although this is a good sign for Linux as it is introduced to a more widespread and mainstream audience, it does cause one to wonder if Red Hat, TurboLinux, SuSe (private) and VA Linux (NASD: LNUX) will survive, given that their business models are at least partially based on giving their product away for free or at a low cost."

"So what are the original companies that began distributing Linux doing now? The purpose of this article is to shed some light on this."

"Red Hat was the first Linux Distributor to go public in September 1999 and was a runaway success in the market, achieving a market capitalization of over $6 billion before the end of the month. The company seemed to have a great business model, giving away its product and losing a lot of money in the process, and then capitalizing on this large installed base in some way, shape or form. Red Hat's market cap achieved critical mass right away and the company began to acquire other companies in order to buy expertise to stay competitive in the market. Because Red Hat allowed users to download its product via a corporate web site, Red Hat was selling advertising on the site, thus generating revenue."

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