Tipping the Red Hat

Red Hat, Inc. is bringing new Linux products to the
market, just as the company gave a presentation indicating strong sales
performance of its operating system and subscription model.

Red Hat is expanding its Enterprise Linux offerings with products for the
mid-tier server and workstation market. The two new products are Red Hat
Enterprise Linux ES and Red Hat Enterprise Linux WS and now give the company
a suite of Linux products to sell to medium and smaller sized businesses.

On Wednesday, Michael Evans, vice president of channel sales and development
for Red Hat, gave a presentation at Lehman Brothers Global Software and IT
Services Conference, in Half Moon Bay, California.

Evans said sales of Red Hat’s Advanced Server system are going better than
expected, and that its focus is on the sales of its operating system, and to
generate future revenues from recurring subscription contracts. Evans said
Red Hat expects its customer to renew subscriptions at a rate of more than
70 percent.

Evans said he estimates Red hat currently holds market share of between
50-80 percent on the Linux operating system software market.

By offering a lower priced version of its Advanced Server software, Red Hat
is trying to enter new markets by targeting different levels of the
enterprise. Red Hat’s Enterprise Linux are certified to work with computers
from IBM , Dell Computer and
Hewlett-Packard and software from several different
vendors. Red Hat said it will be coming out with a new version 3.0 of its
Linux-based operating system.

Red Hat has developed a subscription-based model with differing levels of
service, but it emphasizes it’s an operating system software company, not
interested in developing Linux applications.

In a company press release the company said “Available now, Red Hat
Enterprise Linux ES provides a complete operating system for a wide range of
entry-level and departmental server applications. It is ideally suited for
application-, network-, file-, print-, mail-, and Web-serving, as well as
for running custom or packaged business applications.”