Compaq Partners with Red Hat in Linux Support Deal

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Compaq Partners with Red Hat in Linux Support Deal
R.A. Krause - October 20th, 1999

Event Summary

October 18, 1999 Red Hat (R), Inc., the leading provider of open source Linux-based operating system (OS) solutions (>65% of market) and Compaq Computer Corp. today expanded their strategic partnership to provide call center support for worldwide users of the Official Red Hat Linux OS.

Under the agreement, Compaq's Customer Services organization, which serves hundreds of thousands of organizations in more than 100 countries worldwide, will escalate the most advanced support issues to Red Hat's services and support organization. As Compaq modifies and optimizes the Red Hat Linux OS during the support process, Red Hat will evaluate and test these changes, make them available in future revisions of the OS and deliver them freely to the entire open source community under the GNU General Public License (GPL).

Market Impact

Linux has been gaining market share and momentum, and this announcement adds to its credibility as an alternative enterprise OS. Compaq and the other major Wintel vendors already ship Linux on their systems; we expect the others to follow suit with support agreements.

This announcement will lead to Linux market share growth, although it should not affect the growth of the enterprise OS market as a whole. The relationship between Compaq and Red Hat started earlier this year, including an equity investment by Compaq in Red Hat, as well as a component of joint marketing, development, and certification.

This agreement should also increase Linux's visibility on Microsoft's radar screen not that Microsoft hasn't already tried to respond (e.g. the infamous "Linux myths" tract). This alliance will provide Red Hat and Linux with increased "protection" although perhaps only short-term - against the continuing Microsoft onslaught.

User Recommendations

Users will benefit by having Compaq's strong service and support organization backing up Linux. Although the agreement does not include other Linux vendors, this action should encourage other vendors, both hardware and software, to form relationships of this nature. In addition, users who have wanted to run Linux, but had concerns about industry support, should be less worried about Linux's future. This also allows customers without large internal support organizations to consider Linux more readily.

Linux will not overtake Windows NT within the next two years (even if it does somehow maintain its near-200% annual growth rate). However, we believe Linux will continue to be in the "top three" in market share of shipping Oses. We also believe this announcement will allow Red Hat to increase its percentage of the Linux market. Overall, this is positive for current and potential Red Hat Linux users.

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