Red Hat set to surpass Sun in market capitalization

Linux world is set to eclipse the Unix world, as reflected in the stock prices of Red Hat and Sun Microsystems. Those prices are way out of whack with revenues.

In what may come to be seen as a deeply symbolic moment in the history of operating systems, Red Hat is on the verge of surpassing Sun Microsystems' market capitalization for the first time.

Sun, perhaps unfairly, represents a fading Unix market. Red Hat, for its part, represents the rising Linux market.

As I write this, Red Hat's market capitalization sits at $2.62 billion, while Sun is just ahead, at $2.7 billion. The stock prices are way out of whack with revenues: Red Hat pulled in $627 million in 2008. Sun? More than $13 billion.

Such is Wall Street's confidence in Red Hat's Linux focus, however, that the market capitalizations between the two companies are almost at parity.

Both companies, of course, have product portfolios beyond Linux or Unix. Sun, in particular, has been significantly expanding its portfolio to include full systems that comprise software (OS, database, storage, portals, etc.), services, and hardware.

Given enough time for its open-source strategy to play out, Sun's market capitalization will likely recover and outpace Red Hat's. But for now, a symbolic moment is about to occur. The inauguration of the Linux-based economy?

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About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.

     

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