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Disclaimer: I like Linux. I use it as a desktop OS most of the time. The only reason I still use Windows is that my job requires Photoshop and Gimp is not quite as good (yet) for professional image manipulation.

Previous post focused on strength of Linux and that's where I agree enthusiastically. However, he seems to imply that if Linux becomes as widely used as Windows RHAT will automatically enjoy similar growth. That is certainly possible but not nearly as certain as the poster implied. Let's look at what Redhat will have to face:

1. There is a certain backlash against Redhat among most technically-minded Linux users. This is not something I can prove but that's the impression I get. Considering that these are the people who are developing Linux, this is analogous to Microsoft development stuff deciding that Linux is by far superior to Windows. It's not quite as bad because Linux developers cannot restrict access to their code to anybody due to the nature of GPL license, but this is not a very good thing for RHAT in my opinion.

2. Mandrake is a distribution based on Redhat. Due to the GPL license, anybody can take the whole of Redhat and improve it or simply sell it at any price they wish. Generally, it is believed that Mandrake is a more polished and secure version of Redhat. They can't use Redhat brand but AFAIK they can say 'we are based on Redhat'. It's like heinz ketsup being sold at 1/10th of price (see next point) and that said on the label 'Heins ketsup - same ketsup as Heinz but in a different bottle'.

3. cheapbytes.com and linuxmall.com sell Redhat cdroms for ~$2, minus support. These cds are exactly like the ones you get from Redhat for $50. Talk about commoditized market.

4. LinuxCare specializes on support. They don't pay for any development like RHAT does. Also consider that right now majority of Linux users are very technical and most will probably look at the source code rather than calling Redhat. Will Redhat be able to keep it's pricing model on support (which is pretty inexpensive right now) when Grandpas and Grandmas start calling and asking how to com.. compile a kernal or whatchamacallit? Ouch.

5. Imagine a large company with 5,000 computers buying one single Redhat cd for $50 (if not for $2 at cheapbytes) and installing it on all systems. Yes they can do it and this is one of the attractive selling points of Linux.

6. Debian. The distribution, Redhat competitor that I personally use. It's not developed by a commercial company but rather by a number of enthusiasts just like the Linux kernel (base system on which all distributions are based) is developed. Generally it's considered to be a better than RHAT when used for servers while it lacks in polish and ease of installation and setup. Server market is where Linux is currently getting more share at amazing rate. Desktop, where Redhat would be more likely to beat Linux competition is still dominated by Microsoft and it's not clear if Linux will capture desktop share any time soon.

I like Linux as a user and developer but I don't like it as an investor. RHAT is even less attractive. Betting on RHAT is a speculation.

Also, in my opinion large companies like Intel investing in RHAT probably means that they're trying to use their stake in it as a way to get their own linux offerings more exposure and support. This does not mean that RHAT itself will make alot of money, although it is a good sign for RHAT.

Please note that this post is NOT rigorously researched, I think that most of what I said is true but might be a little bit off (for example, the prices I quote).
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