AOL, Red Hat Talks Rumored

By Chris Gonsalves  |  Posted 2002-01-20

In another apparent attempt to challenge its cross-country rival, AOL Time Warner Inc. is reportedly negotiating to acquire Linux distributor Red Hat Inc. The move could give AOL significant alternatives to software made by Microsoft Corp. and is seen as the latest salvo in the battle between the competitors who have clashed over technologies such as instant messaging and media players.

According to Reuters reports on Sunday, the talks "are still fluid," and officials from AOL, Red Hat, and Microsoft have all refused comment.

Web sites and chat groups that specialize in open-source software discussions were buzzing about the rumors on Sunday. Posters on, the Web site operated by the Open Source Development Network Inc., reacted to the news with surprise and mostly positive comments.

"[AOL] acquires the talent, the distribution, and the brand recognition all in one move. It would save them money in the long run versus [trying] to capture the market share Red Hat already has," read one post.

A number of posters at and other Linux sites said the real value of such a deal could be AOLs ability to create a complete operating system to rival the popular Microsoft Windows OS.

"If it goes through, I foresee a situation like IE versus Netscape, except, in this scenario, millions of homes get a CD with a free OS," wrote one poster. "There are a growing number of people out there who only use their machine for the Net... AOL could do serious, long term damage with their CD in every household approach."

Founded in 1994 Red Hat, with 600 employees, reported a $15 million loss for its 3rd quarter in December. the result was a sharp improvement over its $55.3 million loss in the previous quarter. Last November, The Durham, N.C. company struck a collaboration deal with IBM to deliver open-source software, services and support for IBMs eServer product line including zSeries mainframes; iSeries integrated servers for small and medium business; pSeries UNIX servers; and xSeries Intel-based servers.

Rocket Fuel