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The Talk of ISPCON: Intel, Netscape Invest in Red Hat

Intel and Netscape Communications Corp. showed their faith in the growth of the Linux operating system by investing in Red Hat, a company that builds, maintains and provides technical support for its branded version of the operating system.

The companies made the announcement during a panel discussion of Linux and the open source code distribution model that has fostered its development at ISPCON Fall '98 on Tuesday. A growing number of ISPs have been using the operating system because of its low cost and the amount of control it offers through an open source code.

Linux inventor Linus Torvalds said, "I had a need that drove me to do Linux, and I am not that special. So Linux really filled a void."

ISPs, businesses and individual users seem to be turning to the software as an alternative to Windows NT, the Mac OS and Unix, said Catherine Heenan moderator of the panel and reporter with San Jose television station KRON. The Linux movement has taken much of the industry by surprise, she said.

"Sure it surprises me. It surprises me less than it used to," Torvalds said, because he has been watching Linux spread "from a couple of long-hared hacker guys," in 1991 when he developed it to millions of users now. In the past few months, he said, it seems like the OS has received an increasing amount of press, however.

Bob Young, president of Red Hat Software said the companies did not reveal the amount of the investments because Red Hat is a privately held firm, and the companies do not want comparisons with some of its other investments and partners. "It was enough resources to do what we want to do," he said.

Venture capital firms Greylock and Benchmark Partners have also taken a minority equity position in the company.

The Intel investment may seem surprising to some because of that chip-maker's close relationship with Microsoft, the dominant seller of operating systems with Windows and NT. Sean Maloney, Intel vice president of marketing and sales, said, while the headlines probably sound exciting about Pentium chip maker Intel's investment in an alternative operating system, "the reality is probably a little more boring than that. We want to get as much software as possible running on Intel. It doesn't affect support and development in NT."

John Paul, senior vice president and general manager of the Server Products Division of Netscape said, "It's important that there is a choice." But the two biggest reasons that Netscape invested in Red Hat and is interested in the Linux operating system is that it offers a free distribution model, under which the source code is freely distributed and improved upon by any programmers who are interested. Since improvements are shared, and because the source code is available it gives users a tremendous amount of control.

"The free part is a lot less important than the control part," Paul said.