-- Less than a day after Microsoft Corp. CEO Bill Gates touted the robust
future of the PC, Red Hat Inc. Chairman Bob Young announced the platform's
death in the Comdex/Fall '99 keynote address here Monday.
"Our opportunity is in the killer applications
of the 21st century, not in reinventing the PC platform," Young said during his
wide-ranging speech. "And the killer apps will be Internet appliances."
Young told the packed audience at the Linux Business Expo, a show held in
conjunction with Comdex, that the ease of use and different form factors that
appliances can take on will supplant the PC.
"Most users don't know the difference between an ISA bus and a SCSI bus," he
said, referring to two types of ports used to add functions to PCs. "In fact,
they will pay you not to know or care."
Addressing the Cygnus deal
most of his time to focus on the news of the day, his company's stock-for-stock
merger with open-source tools vendor Cygnus Solutions Inc. The deal, valued
at $674 million, adds a full complement of open-source development tools and the
popular GCC compilers to Red Hat's product portfolio.
It also nearly doubles the company's workforce, adding 180 Cygnus employees
to the 235 who currently work at
Red Hat. Cygnus, which has been around for a decade, earned $21 million in revenue in the
year ending June 30.
"The merger combines the market and technical leaders in Cygnus with the
[financial] resources we have," Young said.
He added that the acquisition was key to the Durham, N.C., company's strategy
of becoming the predominant supplier of Linux and open source to the enterprise.
"What Red Hat has not had are sets of tools for developing apps," Young said.
And Red Hat's not through. Young said to expect rapid-fire business growth
through acquisitions in the near future.
He also took time to disarm some common criticisms of Linux in the enterprise
and even took a few jabs at competitor Microsoft Corp.
"No one buys operating systems," he said. "People buy apps."
Later, asked if the acquisition of Cygnus, which also markets embedded
technology, meant Red Hat was going to compete more directly with Microsoft,
Young replied, "I think that it brings them more into competition with us. It
would be interesting for you to talk to the guys at Microsoft about what they
intend to do about us."
No plans to 'cash out'
downplayed the other news of the day, namely, that Matthew Szulik, the company's
president, had been promoted to CEO, a position Young also held until today.
(Young will remain chairman of Red Hat.)
Young said he had no intentions of "cashing out" or retiring.
"In reality, it's simply an effort to make Red Hat more efficient," he said.
"One of our missions is to build a business and meet our quarterly goals, but
another task is to drive the understanding of how open source works and make
sure it scales. I've spent the last year on the second half and this just
defines that more."
On the recent ruling that Microsoft is a monopoly, Young had little time for
taking swipes. Instead, he talked about how it proved there is value in business
for the open-source model of software development.
"Microsoft owns a monopoly, and no one has ever overthrown a monopoly using
the same rules," he said. "And an alternative model is not enough, either. You
have to improve on the old model."
And the proof is in the highly successful Linux IPOs by the likes of Red Hat
Networks and in Wall Street's optimism about Linux and open-source
"The stock price represents a conviction that we do represent a better
model," Young said.