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September 28, 1998

NETSCAPE, INTEL CONSIDER EQUITY STAKES IN RED HAT

By CBR Staff Writer

Is Linux distributor Red Hat Software Inc poised to become a pawn in the war on Microsoft Corp? Rumor has it that Netscape Communications Corp and Intel Corp plan to take an equity share in Red Hat, which bundles the free operating system and sells it with support as a distribution. The fact that Intel’s Sean Malone, Netscape’s Marc Andreessen, Red Hat’s Bob Young and Linux inventor Linus Torvalds share top billing on an ISPCon panel this afternoon lend that scuttlebutt unusual weight. Netscape’s antagonism towards the Redmond software giant is well-documented, and likely only to be exacerbated by a recent International Data Corp report showing Netscape’s share of the browser market has finally slipped under 50%. But Intel’s interest in open source software is comparatively new and, to Microsoft, doubtless threatening. MSNBC, always quick to protest its editorial objectivity but nevertheless a generally reliable guide to the Redmond party line, on Monday republished a piece by Dean Takahashi for the Wall Street Journal. Though the article was headlined Intel and Microsoft remain allies despite many minor quarrels, the content of the piece suggested that the legendary Wintel alliance is under pressure as never before. Takahashi lists the increasingly numerous points of contention between the ancient allies: PDAs and set-top boxes (Microsoft is supporting non-Intel architectures in these markets); servers (Microsoft objects to Intel’s support for the x86 Unices); Java (Microsoft is accused of using its influence with Intel to kibosh the JMedia Player); graphics (Microsoft is working closely with Intel rival Advanced Micro Devices) and streaming media (Intel is working closely with Microsoft rival Real Networks). Now add an Intel equity stake in a key Linux player to that already-impressive list. Bear in mind that Microsoft president Steve Ballmer admitted to the attendees at Seybold that the Redmond giant fears the open source operating system, and add a dash of Microsoft’s annual filing with the Securities and Exchange Commission on Friday, in which it named Linux as a significant threat. Now draw your own conclusions about intra-Wintel diplomacy in late 1998.

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