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Compaq tries Red Hat's services on for size

Red Hat signs a deal to provide technical support for corporate users of Compaq computers with Red Hat's version of the Linux operating system.

Red Hat has signed a deal to provide technical support for corporate users of Compaq computers with Red Hat's version of the Linux operating system, the companies said today.

The deal bolsters Red Hat's push to make money off services such as technical support and customization instead of from its current revenue mainstay--sales of the Red Hat software product. Under the deal, Compaq Computer representatives will field the routine calls regarding the OS, and Red Hat technicians will provide support for the most serious problems.

The deal nudges Red Hat forward in its battle with Linuxcare to provide technical support for companies using Linux. Linuxcare won a deal to provide technical support for Dell Computer's Linux machines.

Red Hat's transition to becoming more of a services company is gaining headway, according to the company's quarterly earnings filing with the Securities and Exchange Commission.

In the quarter ended August 31, the company posted $1 million in services revenue, a major increase in the $71,000 from the same quarter the year before. The company also made modest progress in its effort to make money by selling advertising on its Web site, an effort that garnered $106,000.

But software sales are still the staple in Red Hat's revenue diet, accounting for $3.3 million in the quarter.

The total revenue still wasn't enough to offset the company's expenses, though. Red Hat reported a net loss for the quarter of $3.1 million, or 9 cents per share, compared to a net profit of $132,000, or 1 cent per share, for the same quarter a year before.

As part of the Compaq deal, fixes created by Red Hat personnel will be contributed to the open-source community, Red Hat said.

Compaq is backing Linux on servers based both on Intel chips and on Compaq's own Alpha chips. In fact, Compaq sees Linux as a way to increase the sales of its Alpha chips.

Compaq invested in Red Hat earlier this year and the two companies have been working to make Linux and Compaq's version of Unix, Tru64, work better together.

The companies didn't disclose financial terms of the deal.