New York Times, September 28, 1998

For Sale: Free Operating System

By Amy Harmon

URHAM, N.C. -- In an experiment that is half business model and half populist movement, a small company called Red Hat Software is charging $50 for an operating system called Linux that anyone can get free on the Internet, and it is paying programmers decent wages to write code that it will give away.

While that might seem the most contrarian of business plans, Red Hat is attracting blue-chip investors to the notion that free can be profitable.

The movement, known alternately as free software and open source, is built around freely distributing source code, the basic commands that programmers write. Publishing these instructions before they are compiled into the binary language of computers offers other programmers the chance to examine the code and suggest or actually write improvements.

At its best, the movement's proponents say, open source could harness the collective wisdom of the world's best software designers for social good, undermine Microsoft Corp.'s Windows monopoly and propagate an operating system that does not crash.

A great deal of their passion is inspired by Linux, a version of the Unix operating system developed by Linus Torvalds of Finland and numerous collaborators worldwide. Linux (rhymes with "cynics") has attracted a cult-like following among programmers and systems developers who say it is a more secure, flexible and economic alternative to Microsoft's industrial-strength operating system, Windows NT.

Despite that kind of following, the business-model half of the Red Hat experiment strikes many people as counterintuitive.

Robert Young, the chief executive of the three-year-old company in Durham's Research Triangle Park, insists that open-source products can make money. And although he has nothing against contributing to a utopian vision of software development in the process, his pragmatic focus has lately attracted interest from venture capitalists and corporate backers.

"The software industry is built on intellectual property," said Young, a 44-year-old Canadian who used to run a computer-leasing business. "You own your technology, and if you get it widely disseminated you can coerce your user base into buying new releases. We give up that control -- and those profits -- but that is exactly what is going to drive our success, because that is what's best for the user."

Among Red Hat's potential corporate backers are Intel Corp. and Netscape Communications Corp. An announcement is expected as early as Tuesday, when Young is scheduled to appear with executives from both companies in San Jose, Calif.

Such support, particularly from Intel, whose close ties to Microsoft have recently shown signs of fraying, would lend considerable credibility both to Linux and to Red Hat's plans to build a business by providing customer service and technical support for the free operating system.

Recent support for Linux and other open-source projects seems to suggest a growing acceptance in the software industry of an alternative to the tradition of proprietary code.

IBM, for example, recently licensed Apache, a popular program for serving up World Wide Web sites. Like Linux, Apache is a free, open-source product.

And Netscape last February published the source code to its Navigator browser for navigating the World Wide Web. Forced to stop charging for Navigator by Microsoft's free distribution of its competing browser software, Explorer, Netscape gambled that going one step further and releasing its code would give Navigator a competitive advantage over Explorer in the long run by spurring innovation.

"Open source has already radically changed the computer industry," said Tim O'Reilly, whose publishing company, O'Reilly & Associates, makes money producing user manuals for free software. "In the first round, open-source software will not beat Microsoft at its own game. What it is doing is changing the nature of the game."

Torvalds, who wrote Linux in 1991 when he was a student at the University of Helsinki, licensed it in a way that allows anyone to submit improved code and redistribute it at will. Since then, thousands of programmers have volunteered elaborate improvements of their own design for no more reward than the respect of the geek subculture.

Submissions to Linux's core code, or kernel, are subjected to instantaneous electronic peer review, a technological meritocracy that has so far insulated Linux from the kind of fragmentation that has befallen other operating systems built around the international Unix standard.

Despite the operating system's reputation for power and reliability, corporations have been reluctant to use Linux because nobody owns it. That is why the emergence of companies like Red Hat and Caldera Systems Inc. -- a Linux distributor with a business plan based on corporate training, services and support -- is considered crucial to the success of the free operating system.

Now, bolstered by commitments from companies like Oracle, Netscape, Intel, Informix and Corel, all of which have announced plans to support Linux in recent months, Red Hat and Caldera are getting more aggressive.

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