Intel, Netscape back Red Hat

Red Hat Software, distributor of a version of Linux, today announced that Intel, Netscape Communications, and two venture capital firms will take equity stakes in it.

Demand for software based on the Linux operating system has mushroomed in the last year and will quickly overtake all other versions of Unix combined, Netscape cofounder Marc Andreessen said in an exclusive interview with CNET News.com today.

That is molding not only Netscape's product strategies but also led to the firm's investment in Red Hat Software. But Andreessen said the Red Hat investment is not meant to slight other Linux vendors.

"As the growing number of users demonstrates, the Linux operating system is ready for enterprise-wide applications," Red Hat president Robert F. Young said in a statement.

"Today's announcement reaffirms Netscape's commitment to Linux as a strategic enterprise-ready platform," John Paul, senior vice president of the Server Products Division at Netscape, said in a statement.

Venture capital firms Greylock and Benchmark Partners have also taken minority equity positions in the company. The deals, previously reported on CNET News.com, were announced today at the ISPCON trade show in San Jose, California. Financial terms were not disclosed.

Support from two significant computing companies will clearly give greater market presence to Red Hat.

At the same time, Netscape and Intel will be able to strengthen their ties with Web developers and small and medium-sized companies. These developers form the core of the Linux believers and their numbers are growing.

Linux, a Unix-like operating system, has been gaining ground with users and is increasingly seen as a competitor to Windows NT.

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The investment largely fits with Intel's overall venture philosophy of using minority investments in small companies to expand the acceptance of the Intel platform, said Robert Manetta, an Intel spokesman. In this case, Red Hat is positioned to help popularize the platform with ISPs, and in particular those ISPs which favor the Linux operating system.

ISPs have become one of the most sought-after customer segments. Sun, Hewlett-Packard, and others have recently ramped up their own efforts to recruit ISPs to their respective hardware products.

"Linux is getting a lot of attention out there," he said.

Intel currently has investments totaling close to $750 million in approximately 125 companies.

Linux was initially released in 1991 when creator Linus Torvalds was a student at the University of Helsinki. It has since grown into a Net-based software phenomenon, with millions of users counted as converts and countless software additions submitted to various ad hoc Linux Web sites for use.

Intel is an investor in CNET: The Computer Network, publisher of News.com.

CNET News.com's Tim Clark contributed to this report.