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Examining Novell and Red Hat: Page 6 of 10

With the SuSE acquisition, Novell is doing the equivalent of remodeling its house while it's still occupied. The company has the unenviable task of going on with business as usual--convincing the old users that everything will stay pretty much the same--while launching a new company direction and convincing new adopters that everything will be totally different.

In the competition for Linux loyalty, Red Hat has the first-mover advantage. It is not encumbered by the turmoil and costs associated with large-scale mergers and acquisitions; it doesn't face conflicts over open- and proprietary-source code--all its code is open. Red Hat has excelled in getting key customers in the United States, and it's built a valuable IT credential with its RHCE program.

Although Red Hat hasn't taken Novell's data center-to-desktop approach--at least not yet--it has strong enterprise-application support from companies such as BEA Systems, Oracle and PeopleSoft. And though its pockets don't run as deep as Novell's, Red Hat has garnered enough Wall Street capital to fuel its growth for the foreseeable future. In fact, it just raised $600 million in a bond offering--$200 million more than anticipated.

Founded in 1993, Red Hat was the first company to make a credible commercial move to Linux. Although it has something to prove, the company has nothing to disprove about its past self--unlike Novell, which must grapple with its image.





Red Hat Financials