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Red Hat taps Netscape to broaden its landscape

Linux seller to open-source Netscape Enterprise Suite in a bid to expand beyond its core product.

In a move to add more open-source arrows to its quiver, Linux seller Red Hat has acquired the Netscape server software products of Time Warner for $20.5 million in cash, the companies said Thursday.

As first reported by CNET, Red Hat plans to release the Netscape Enterprise Suite as open-source software, meaning that anyone will be able to use, modify and redistribute the products. It's a new step in Red Hat's "open-source architecture" plan to expand beyond its core product, the Linux operating system, CEO Matthew Szulik told analysts at a company conference Thursday in New York.

In a regulatory filing, Red Hat said it has already paid $20.5 million and will pay an additional $2.5 million if certain customers order the software by April 30.

The new software will help Red Hat "achieve deeper penetration into the enterprise and government market" and, eventually, increase the price customers will pay for Red Hat Enterprise Linux, Szulik said in a Wednesday interview. The software will be incorporated into current Red Hat products in the next six to 12 months.

The move expands Red Hat's open-source attack on competitors such as Sun Microsystems, Microsoft and Novell that have proprietary products in the same market. Red Hat's new software includes Netscape Directory Server, used to manage information such as usernames and access policies, and Netscape Certificate Server, used to manage user identities and encryption chores.

The move also adds another chapter to the long story of Netscape, a start-up whose software helped to ignite the Internet mania of the 1990s.

America Online, now a unit of Time Warner, bought the Netscape products in 1998 when it acquired the company in a complicated $4.2 billion transaction. As part of that deal, Sun got the Netscape intellectual property--and many of its programmers--for use in products called iPlanet, Sun Open Network Environment and now the Java Enterprise System.

What Red Hat got is very different from what Sun has now, though, said Joe Keller, vice president of application and development platforms for the Santa Clara, Calif.-based software and server company.

"They're buying antique software," Keller said, adding that Red Hat's tactical shifts are confusing. "They used to find the best of open source and bring that forward. Now they're buying the oldest of commercial software and making it open source."

But Netscape's server software wasn't frozen in 1998. The acquisition includes a team of fewer than 50 programmers, Szulik said, and the directory software is included in Hewlett-Packard's Web Server Suite for Unix.

RedMonk analyst James Governor saw the move as a response to rival Novell, whose hybrid approach combines its open-source Linux with higher-level proprietary software.

"Red Hat needs to keep filling out its portfolio if it plans to compete with other (software) stack players," Governor said. "Directories and authentication, authorization and access management are all areas where Novell has a massive lead in terms of technology and customer adoption."

Sun and Red Hat, though business partners, have a somewhat fractious relationship. Sun is trying to woo Red Hat customers, while Red Hat accuses Sun of insufficient open-source support.

Red Hat's open-source move echoes a strategy Netscape itself tried in 1998, when it released the source code of its Web browser to fend off the increasingly popular Internet Explorer from Microsoft. But Netscape kept the server software proprietary.

And the Linux seller hopes not to repeat another part of the Netscape Web browser saga: the years it took to get open-source programmers to contribute to the project. Szulik said he believes Red Hat will be able to build a community, as it has with the previously proprietary Sistina file system software it acquired earlier this year.

But open-source programmers already have an option when it comes to open-source directory software: the OpenLDAP project that Red Hat already includes. Szulik said the company will include both packages.

It's not yet certain what open-source license Red Hat will choose to govern the software, but the company's intent is to use the General Public License (GPL) that governs Linux itself, Szulik said.

Red Hat approached AOL about acquiring the software, Szulik said. "We continue to look for small, smart teams with rich technology we can integrate quickly into the open-source architecture," he said.

The Raleigh, N.C.-based company has nearly $1 billion in cash and marketable securities, most of it stemming from a $600 million bond offering early in January. One reason for raising the money is to pursue acquisitions, Red Hat said.