“Client faces strong competition from well-established companies with differing approaches to the PC market” – Microsoft in SEC filing.

By Rick Smith, LTW Editor

RALEIGH, N.C. – Happy 10th anniversary, Hatters. Can it really be that went public 10 years ago on Aug. 11, 1999? How time does fly – and how big an impact the Linux crew has had on the world ever since.

And how is this for an unintended toast – words of respect from Microsoft in an SEC filing. Now that must have been sweet reading at Red Hat’s headquarters where there is no love lost between the folks in fedoras and the Borg of software.

Much has changed since the Bob Young and Matthew Szulik-led company turned Wall Street red and black with their fedoras. Opening on the Nasdaq, Red Hat shares exploded, the RHAT symbol attracting so many buyers that shares tripled in value.

After opening at 14, RHAT closed at $52.06.

Suddenly, Red Hat, which was then a small company based in Durham, had a market cap of $3 billion. A serious threat to Microsoft and Unix seemed to have emerged.

A lot of Red Hat employees and investors also became millionaires that day.

Iain Gray, vice president of customer engagement at Red Hat, “tweeted” at Twitter about that crazy day.

“10 years today since Red Hat IPO. I remember sitting in the Sun office in UK watching the stock sky-rocket thinking the world had gone mad,” he wrote.

Much has changed since then. Red Hat shares now trade on the New York Stock Exchange under RHT. The company is based at North Carolina State University’s Centennial Campus in Raleigh. Young has gone on to found self-publishing company Lulu. And Szulik is semi-retired as chairman. But the respect for its Linux work continues to build. Red Hat makes its money from supporting servers and corporate networks, with many of those clients doing business on Wall Street while its software has received top security classification from the Pentagon.

Red Hat’s market cap has grown over time to more than $4 billion with a closing share price of $21.60 on Tuesday. Of course, many more shares are available now than on IPO day.

But a C/net story about opening IPO day documented just the Hatters:

“The company released 6 million shares under the sale. The stock offering was designed to raise between $60 million and $72 million to finance Red Hat’s expanding operations. It has instead raised about $84 million.”

The “seminal event” for Red Hat, as C/net described the IPO, also established open source Linux as a legitimate player.

"It’s really the first test case for Linux in the broader public marketplace," Brian Behlendorf, a leader of the open-source Apache Web server project, told C/net that day.

How far has Red Hat come? Well, after being dismissed as a potential rival for years by the Borg at Microsoft, the software behemoth acknowledged Red Hat and Linux as real competitive threats.

“Client faces strong competition from well-established companies with differing approaches to the PC market,” Microsoft wrote in the filing.

“Competing commercial software products, including variants of Unix, are supplied by competitors such as Apple, Canonical, and Red Hat. Apple takes an integrated approach to the PC experience and has made inroads in share, particularly in the U.S. and in the consumer segment.

“The Linux operating system, which is also derived from Unix and is available without payment under a General Public License, has gained some acceptance, especially in emerging markets, as competitive pressures lead OEMs to reduce costs and new, lower-price PC form-factors gain adoption. Partners such as Hewlett-Packard and Intel have been actively working with alternative Linux-based operating systems.”

What will Microsoft be saying 10 years from now?

Red Hat certainly faces challenges, but it remains profitable and its acquisition of JBoss broadened marketplace opportunities. New CEO Jim Whitehurst is evolving into every bit the evangelist that Szulik and Young were at the height of their Hatter days. And the stock has rallied strongly from the doldrums that swept through the tech sector last fall.

So, happy IPO birthday, Hatters. Even better days could be ahead.