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Red Hat takes aim at Linux Web portal business

Huge switch in business focus to come via e-commerce, content efforts

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Red Hat is planning a dramatic shift in the focus of its business by - effectively - betting it on the Web. Speaking to The Register earlier today company COO Tim Buckley said: "Our goal is to become the definitive site for Open Source software." Over three to five years, says Buckley, Red Hat intends its business to split as follows: 30 per cent product, 35 per cent services and 35 per cent portal (i.e., the Web bit). Those numbers may be more than a little understated: confronted with them chief marketing officer Tom Butta chirruped "80 per cent portal" before being gently countermanded by Buckley. But it's clear that Red Hat is seriously keen on switching the company focus to the Web. You can get some perspective on this by noting that currently Red Hat's business is 80 per cent product. The company has, says Buckley, been running the plan past analysts over the past few months, and the reasons for the move are pretty convincing. The product itself is free, so there's an imperative to derive revenues from support and services (which is the open source model anyway). But as bandwidth availability increases, "you can download in seconds rather than 36 hours" - the product becomes even less of an issue, because you can get it instantly, and the mechanism whereby you get it, and what you do along the way, becomes far more important. So Red Hat is developing a combo e-commerce and content site which is intended to provide both that mechanism and an 'everything you want to know about open source' service. It's being worked on by Atomic Vision, the San Francisco Web design outfit Red Hat bought earlier this year, and the content side is being masterminded by an ex-Wired luminary. Funnily enough, the acquisition of "certain assets" of Atomic Vision was casually mentioned in Red Hat's Q2 report, and nowhere else. The report laconically says this has resulted in improvements to Red Hat's Web site, which would appear to have been something of an understatement. Former Atomic Vision president Matt Butterick has been Red Hat's director of Internet business since the acquisition in May. There are obvious gotchas to the scheme. Red Hat professes not to see other Linux distributions as competition right now, because they're all ramping as fast as they can go anyway, but "the definitive site for open source" has to be seen not to favour one company, and that doesn't sit well with Buckley's view that the Red Hat brand will be important to the portal. On the other hand, you might say similar about VA's association with a Linux site with similar ambitions. Still, figuring the difference between promoting Red Hat as the only true open source Linux (Buckley's words: "Everything we do is open source - that is not the case with our competitors") and Red Hat as the proprietor of the source of all open source knowledge and info, will be tricky. The Register, which knows a thing or two about content, Web operations and their funding, suggested that Red Hat must obviously have thought about the possibility of spinning the portal operation off and going for an IPO for it, but Buckley insists that this hasn't been considered. ®

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