Ericsson will pay Red Hat to create specialized versions of the Linux operating system in several Internet-enabled devices for the home, said Kim Knuttila, general manager of Red Hat's client services group. In addition, Red Hat will help Ericsson adapt its product line to Linux, and both companies will engage in joint marketing and branding work, he said.
The first device from the partnership, demonstrated in February and scheduled to go on sale later this year, is a two-part computer phone. The device, the HS210 Screen Phone, has a base station and a portable screen section, both running Red Hat Linux and connected with the Bluetooth wireless communications technology.
The device, which Knuttila said uses Intel's StrongArm processor, comes with a touch screen, speakerphone, Java software, Web browser and email client.
The Ericsson partnership is an example of Red Hat's business model to make money selling services based on Linux, a clone of Unix that's available for free. Terms of the Ericsson deal weren't disclosed, but Knuttila said it isn't an exclusive relationship.
The Red Hat deal comes at a momentous time for Ericsson. The company, one of the leaders in wireless communications, is seeing a flood of competitors enter the market it helped create. Two weeks ago, the company warned that profits would be dragged down by a $255 million loss in its mobile phone business unit.
To ensure its future, Ericsson plans to come out with a variety of new devices, including wireless handheld gadgets, and to rely on other companies for software design and manufacturing. In the past, Ericsson largely performed its research and product manufacturing in-house.
"This is a change from previous policy, which was oriented toward providing everything ourselves," chief executive Kurt Hellstrom said in June. "That is no longer possible.
"It is better to be first to market than to do it completely by yourself. Hopefully, I will be able to change the culture."
Red Hat, too, faces growing competition. It's the biggest seller of Linux for servers, where the Unix clone grew to popularity. But when it comes to "embedded" uses such as Web pads, network routers, factory robots or other non-PC devices, Red Hat faces competition from MontaVista Software, Lineo, TurboLinux, TimeSys, LynuxWorks and others.
And that's just for embedded Linux. Other companies, such as Wind River Systems, already provide software for the embedded market.
Embedded Linux companies charge fees for providing programming tools to develop products, but only some charge the per-unit royalty fee that's a traditional part of an embedded software company's revenue stream. Red Hat won't receive any royalty fees for use of its software in the Ericsson devices, the company said.
One feature of the embedded landscape is a much wider variety of chips than in the server and desktop computer areas. Popular CPUs are made by Motorola, Intel, MIPS, Hitachi, NEC and several other companies. Consequently, an embedded software company benefits from experience translating software to run on different CPUs.
Several embedded Linux companies have focused on acquisitions as a way to get this expertise, and Red Hat is no exception. The Ericsson deal was made possible by Red Hat's 1999 purchase of Cygnus Software, which develops compilers and other programming tools to help write software for a variety of chips.
The deal with Ericsson involves not only Cygnus' programming tool experience but also Red Hat's ability to modify the kernel, or heart, of Linux. Knuttila himself comes from the Cygnus side of the company.
One aspect of the deal with Ericsson and Red Hat will be development of software that allows gadgets to be updated by the company that sells them--a big change from the PC practice of making people responsible for downloading and installing patches. The remote update method is used by cell phone companies to enable new services without customers having to install new software.
The remote update and management software requires that software be developed not only for the client but also for the telecommunications company's server that's in charge of doing the updating. Knuttila said he believes it's "extremely likely" that such servers will run Red Hat's Linux.
New products are coming besides the screen phone, though Knuttila declined to describe them. "It'll be much broader than just the phone," he said.