Red Hot Red Hat

This is the first story in an occasional series examining Triangle-area companies making splashes in the technology arena.

Somewhere hidden among the trees in Research Triangle Park, David waits to slay Goliath.

David is Red Hat Inc., the Linux distribution company that made headlines when it went public in August. Its Goliath: Microsoft.

The battle between the two computer operating systems has been brewing since Linux was first created in 1991 by a Finnish student named Linus Torvalds.

Linux is unique for being an absolutely free, open source operating system-unlike Microsoft Windows, which a user has to buy. The original Linux code written by Torvalds, as well as any improvements or changes, is available to anyone and everyone to download and run at no charge.

But despite its free status, Linux has remained relatively unknown to the general public. Linux's strength is its code, which is open to everyone to add onto or copy. Unfortunately, the code was also the reason for its obscurity-only hackers, programming geeks and Microsoft-haters who know how to revise code can use it.

It was not until Red Hat announced its initial public offering and saw its stock price rise 272 percent on the first day of trading this summer that less-computer-literate people began to pay attention to Linux.

"It's been getting more and more popular for the last year and a half or so. Then with Red Hat IPOing, everything went boom," said Trinity senior Dan Mills, a member of the Duke University Linux Users Group.

He met Bob Young, who owned a catalog company that sold Linux products. The two merged their companies and their different strengths.

"[Young] ended up doing all the business stuff that I didn't want to do and allowing me to just concentrate on the technology aspects, so it was a pretty good fit," Ewing, now chief technology officer, said to Salon magazine.

Red Hat quickly became an industry leader, known for its quality Linux product. But Young and Ewing envisioned more.

"It's [our] commitment to change, this fundamental belief that we are leading a shift in technology and the way software is developed and deployed that is the personality of Red Hat," said Young, now CEO.

They began recruiting investors to put faith in Red Hat's-and Linux's-potential.

"Last year around this time, Intel and Netscape invested in Red Hat, and we were still a private company, and from that point on, it... was a rollercoaster," said Red Hat spokesperson Melissa London, who earned her masters in liberal studies from Duke in 1997.

There is rhyme and reason to why certain investors are putting their cash on the line for Linux distributors. Netscape, for example, is fighting its own battle with Microsoft over web browsers. Similarly, Corel Corporation now offers a WordPerfect version compatible with Linux. An alliance with Linux could help both companies' chances at felling the mighty Microsoft.

Meanwhile, Microsoft has been fighting back. Although it will not comment on competing operating systems, Microsoft officials are very aware of Linux's growing popularity. Last year, an internal memo-dubbed "the Halloween document"-was leaked to the public. It outlined Microsoft's strategies for getting rid of Linux.

But whether or not Microsoft even needs to take such an aggressive stance is debatable. The Linux-software company alliances may take a bite out of Microsoft's market share, but the chance that Linux can overtake Windows' popularity is slim.

Simply, Linux's biggest problem is its relatively inaccessible user interface.

"The only downside to [Linux] is that it's hard to use [for most people]," Mills conceded. "It's harder to use than other operating systems."

The reason why Linux proponents love it so much is exactly the reason why the everyday user would be baffled by it-its flexibility to be coded to specific needs. "I can make it do whatever I want to," said Mills. "[Linux] allows everyone to modify it to their needs. If I really have a special need that it doesn't currently cover, I'm a programmer so I can sit down and extend it and write code for it and make it do whatever I want it to do."

But most people cannot write code. Although you can download and use Linux without charge or supervision, people who are not programming geniuses will probably run into some trouble.

That's where Red Hat comes in.

"Red Hat doesn't just put its name on a free operating system," London said. "Red Hat has a full range of services and support for that operating system."

The idea of open source, free products making any money is baffling. After all, anyone can download a copy of Red Hat for free and sell it under a different name. But as Young has said, Linux has created a new game with new rules.

"It is a new business model that most companies don't follow," said Mills, who uses Linux from another company. "Some people don't understand that the model is just different. Microsoft sells you the program. Red Hat sells you the support."

The buzz around Red Hat might come more from interest in the open source movement and the "new business model" accompanying it. Most Linux advocates, including Young, believe in an almost religious fashion that open source is the future of computing.

"How this works is simple: Would you buy a car with the hood welded shut? If you did, you'd really have to trust that that car always works properly..." Young said. "But by giving our users the source code behind their [operating system], we are fundamentally giving our users the ability to pop the hood of their car if they need to...."

"Quite simply, we are prepared to give our customers benefits that companies like Microsoft are simply not prepared to give, and that is control."

Despite talk about Red Hat becoming "the Microsoft of Linux," the company is not in a position at present to take over the market. Red Hat may be red hot, but financially, it is still in the red.

The company was emboldened by an increase in revenues in the second quarter this year, but it's seeing competitors emerge from the same obscurity that it was in a year ago. TurboLinux is gathering up investments. Additionally there is also Caldera, Debian, Slackware and S.u.S.E.

Red Hat may be the Linux leader for now-but being in that spotlight makes you a prime target for competitors.

"We have an awful lot of work to do to capture the amount of opportunity that is in front of us. The IPO was by no means an end result. We are merely at the beginning of our fight against proprietary legacy operating systems," Young said.