By Dan Jones and Rachel Chalmers
Red Hat Inc has bolstered its position as a Linux linchpin with the acquisition of open source tools vendor, Cygnus Solutions, in a stock deal worth $674m. The deal will give the Durham, North Carolina-based operating system vendor a much broader focus than it has previously had, as Cygnus has expertise developing software for embedded applications and mobile devices, such as handhelds and mobile phone. Separately, the firm announced that Matthew Szulik would become president and CEO of Red Hat, with Bob Young moving away from the day-to-day running of the company to become chairman. Cygnus is Red Hat’s first major acquisition since its phenomenally successful IPO three months ago. Red Hat expects the merger to close by January 27.
The importance of the merger is that no one buys operating systems; people buy applications, Young said in his keynote at the Linux Business Expo in Las Vegas. What Red Hat has not had is an industry-leading set of developer tools and programs. Meanwhile Cygnus has not had the resources to make its tools as ubiquitous as possible in the marketplace. Red Hat will use the acquisition to bolster its offerings to the developer market, Young explained: More developer support means more applications, and more applications means more Linux users. The market he has in mind is not necessarily the people who are already contributing to open source software projects, it’s the bulk of developers, who are building dental office billing systems and other applications of that ilk.
Is this purchase, then, the first salvo in Red Hat’s assault on the consumer desktop? Young quotes Tim O’Reilly’s stock response to such queries: ‘What a boring question.’ The desktop is a 1980s technology model. You had dumb, DOS-based terminals connected to a smart server. As Judge Jackson has found, Microsoft has a de facto monopoly because all the applications that are available are built for Windows. Young implies that it’s not even Microsoft that’s the problem, so much as the extent to which Microsoft controls the terms of the debate. Who says the consumer desktop is the ultimate market? The opportunity we have is not to reinvent the killer applications of the 20th century; he says, it’s to invent the killer apps of the 21st. These, he maintains, will be based on internet appliances, of which the Palm VII and the TiVo are the first generation. As Jon maddog Hall is fond of saying, don’t worry about 400 million PCs, worry about what the other 5.6 billion people on earth are going to use, Young concluded. He wants them to be using Red Hat Linux.
