A Shot in the Arm for RTP Tech: IBM, Red Hat To Expand Their Partnership Today

RESEARCH TRIANGLE PARK — Red Hat got a boost from Big Blue today.

And with the news could come a welcome dose of good news for the Triangle’s high-tech sector, given both firm’s strong RTP connections.

The Wall Street Journal and The New York Times reported in this morning’s editions that the two companies were expanding their partnership with IBM moving to deploy Linux Advanced Server software across more product lines.

Red Hat issued its own press release later, and when Wall Street opened today Red Hat stock jumped 15 percent, or 76 cents, to $6.01.

The stock closed the day at $5.81, up 56 cents or nearly 11 percent. More than 6 million shares were traded.

According to The Journal, IBM is paying Red Hat an undisclosed sum to adapt its software for use in IBM machines beyond the eServer xSeries.

Perhaps more importantly, the companies say that they will “jointly sell their products and support services to big business customers deploying Linux,” says The Times.

In its announcement, Red Hat said IBM’s powerful Global Services unit will provide Advanced Server and Red Hat Network managed software services and “complement them with comprehensive joint service and product offerings.”

The Journal says that Matthew Szulik, Red Hat’s chief executive officer, expects IBM’s powerful name and sales/service groups “will help accelerate deployment of Linux world-wide.”

That could be an understatement. Maybe the IBM news was one of the reasons Red Hat had such a big job fair at its new offices in NCSU’s Centennial Campus a few weeks back.

IBM’s endorsement in forging what The Times callas a “multiyear alliance” also is a big boost in the credibility for Red Hat’s Advanced Server. The Hatters struck an alliance with Oracle earlier this year to deploy Advanced Server.

Advanced Server was rolled out this spring to considerable acclaim at a big event on Wall Street. It’s described as the first “enterprise-class operating system” for open-source Linux, and Red Hat said it would target the Fortune 500 with the Linux-on-steroids as well as offering training and support.

Red Hat (Nasdaq: RHAT) closed at $5.25 on Friday, well off its 52-week high of $9.50. But that’s also a significant recovery from its low of $2.40.

Coincidentally, Red Hat will host a conference call on Tuesday after the markets close to discuss its most recent earnings. Red Hat reported a $4.3 million loss last quarter despite an increase in revenues.

According to International Data Corp., Linux’s share of the desktop market remains microscopic when compared to Microsoft (2.7 percent to 94 percent), but sales did increase nearly 50 percent last year — and The Journal notes the percentages don’t reflect all the free copies of Linux floating around. IDC told The Journal that up to 12 copies of Linux are given away for everyone sold.

Red Hat’s move into the enterprise market ($800 per server at low end) could mean even more sales. The Yankee Group told The Journal last week that 38 percent of 1,500 corporate executives it surveyed are considering a switch to Microsoft, in part due to changes in Microsoft licensing.

The penguins are marching.

Local Tech Wire’s look at Advanced Server: ‘Linux and Software Pros Give Thumbs Up to Red Hat’s Enterprise Drive’: www.localtechwire.com/article.cfm?u=399