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Red Hat rethinks news site, portal plans

The company scales back its plans to create a Linux and open-source news site, a setback for its strategy to diversify its revenue streams and create a dominant Linux Web site.

Red Hat quietly has scaled back its plans to create a Linux and open-source news site, a setback for the company's strategy to diversify its revenue streams and create a dominant Linux Web site.

Red Hat launched the site last year as part of its plans to bring as many visitors as possible to the company's Web site. The site, called Wide Open News, was envisioned as more than a public service for open-source software. Red Hat planned to create a destination for all things Linux and to earn revenue through ad sales, software sales and leads on service contracts.

On Friday, though, the company laid off three of the four Wide Open employees and transferred the fourth to another position, said Walter McCormack, general manager of Red Hat's overall Web site.

The Wide Open site will remain on the Web, but in a less ambitious form. The site will be populated with stories from a handful of syndicated news partners, McCormack said. Those partners already provide about 80 percent of the stories posted to the site. Salon.com, one of the partners, saw its stock jump as much as 90 percent when it became a content partner.

Red Hat employees will focus instead on bringing deeply technical content to the Web site, work that's closer to Red Hat's support and services mission, McCormack said. "We are refocusing our business on what is really strategic to us," he said.

The belt-tightening is emblematic of the times of comparative privation that have moved in since Linux stocks dropped and Wall Street backed off of its assumption that Linux was an easy road to riches. During the rosier era Red Hat helped ignite with its initial public offering, the company said it hoped to make its Web site "the definitive online destination for the open-source community."

The move at Red Hat is not likely to cause much grief at Andover.Net, the collection of Linux and technology sites such as Slashdot.org, which has been competing with Red Hat for the attention of Linux fans.

VA Linux Systems, a maker of Linux computers and owner of the Linux.com Web site, agreed to acquire Andover.Net as part of VA's own effort to be the dominant Linux Web site.

Even as Red Hat is curtailing its original content, Andover.Net is bolstering its own. The company plans to launch a print magazine dubbed Open in August.

"It's definitely a boost for VA, especially with them launching their new publication," said Giga Information Group analyst Stacey Quandt.

A representative for VA declined to comment.

In its most recent Securities and Exchange Commission filing, Andover.Net claimed 3 million unique visitors and 60 million pages viewed each month. Red Hat's Web site, by contrast, has about 20 million page views per month, McCormack said.

The Web site was responsible for about $650,000 in revenues in the most recent quarter--money from selling advertising or offering business partners placement on the site.

The figure doesn't include money earned through sales of Red Hat's own software or services, McCormack said. In the future, however, Web site revenues will include some revenues from sales of other companies' products showcased in Red Hat's marketplace section.

For Web site content produced by Red Hat's own staff, the company will make its technical expertise available, McCormack said. "We will focus on the high-end and deep technical" content, he said. Red Hat will try "to 'Webify' the content that's being created elsewhere in our company. We have a lot of engineers, people doing quality assurance, documentation and marketing."