Will Microsoft buy Red Hat?

commentary Impossible?OK. So anti-trust lawyers would have a field day but consider this -- the software giant is on an official spending spree and this is the best time to spread its wings ...
Written by Fran Foo, Contributor
commentary Impossible?

OK. So anti-trust lawyers would have a field day but consider this -- the software giant is on an official spending spree and this is the best time to spread its wings ... to become the Coca-Cola of the IT industry.

Like most successful companies in the FMCG (fast moving consumer goods) world, the Coca-Cola Company has been extremely effective at diversifying both its brands and target audience.

Who would have thought that a mere carbonated soft drink could one day create a beverage powerhouse with nearly 400 brands in 200 countries? Under the umbrella of Coke came spinoffs like Vanilla Coke and Diet Coke for the health conscious. Sprite, Fanta, Lift and Powerade are also familiar names.

To compare Microsoft and Coca-Cola may seem like an unbalanced juxtaposition but there are similarities. Microsoft has launched a "diet" version of Windows called Windows XP Starter Edition in Malaysia, Indonesia, Thailand, Russia and India.

Microsoft is intent on growing, organically or otherwise. Since 1994, it has made 61 acquisitions and invested in 138 companies and thereÃ,´s no stopping now. In fact, chief financial officer John Connors recently said big acquisitions are on the radar following its failed attempt at SAP.

Expansion comes in a variety of ways and for a myriad of reasons. Hewlett-Packard harboured the desire to topple IBM but after shelling out US$19 billion for Compaq, has it come any closer? Oracle's hostile takeover of PeopleSoft is another classic example of guerilla tactics in the tech industry. Will $7.7 billion be enough to kill the competition?

As for Microsoft, there are several opportunities to consider.

If Microsoft wants to expand its operating system empire, then a look at Linux vendors such as Red Hat might do the trick. Instead of a outright acquisition -- since authorities are bound to play the anti-competitive card -- Microsoft can also consider acquiring a stake in the Linux vendor.

If this proves too much of a barrier, then Microsoft might consider developing its own Linux operating system. It definitely has the marketing muscle and R&D dollars to pursue it. Whether it fits into the companyÃ,´s overall strategy is another question.

Another target could be, well, Oracle.

Since SQL Server has a leading share in the mid-sized market, Oracle would fill the enterprise database gap for Microsoft. As a sweetener, Oracle's majority stake in JapanÃ,´s Miracle Linux -- which co-developed the Asianux 1.0 Linux operating environment -- would give Microsoft a backdoor into Asia's burgeoning open-source software market.

Storage vendors such as EMC and Veritas could also be takeover targets. If MSN wants to tighten its stranglehold on the Internet sector, a likely candidate would be Yahoo. And what about online auctions? Should eBay be concerned?

To these companies, the Redmond giant is a bitter enemy. But armed with a blank cheque, Microsoft could prove even more fatal.

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