Red Hat to set up open-source software store: source

By Jim Finkle

BOSTON (Reuters) - Red Hat Inc. (RHT.N) plans to create a Web store to boost sales of its own open-source software and of compatible open-source products from other companies, a person familiar with the plan said on Thursday.

The company plans to announce the strategy next week when it releases the first major upgrade in two years to its core Linux-based operating system, according to the source.

Red Hat declined comment.

The company has invited Wall Street analysts and journalists to a March 14 gathering in San Francisco for a briefing on its new operating system and the company's strategic direction, according to an email invitation.

The software maker plans to launch the Web software store before the end of the year with a limited number of products, and roll it out slowly, the source said.

Linux is the most popular type of open-source software, which was developed as an alternative to proprietary software such as Microsoft's (MSFT.O) Windows and lets developers share code and add functions free of charge.

Red Hat, the top distributor of Linux, charges fees to its corporate customers for custom features, maintenance and technical support.

Adding the store to Red Hat's Web site will make it a one-stop shop for open-source software, said Katherine Egbert, an analyst with Jefferies & Co.

"This opens up a whole new area. It makes them kind of ground zero for open-source technology," she said. "It's an indirect way to promote Linux."

Red Hat specifically plans to use the marketplace to tout a technology known as virtualization, which it is incorporating into its new version of Linux, known as Red Hat Enterprise Linux 5.

Virtualization simplifies technology management, allowing businesses to squeeze more computing power out of their networks and reduce the number of servers that they need to buy and maintain.

While those features make the new Red Hat Linux version a more powerful product, analysts say that Red Hat's customers may initially be reluctant to try out that technology because of concerns that its first version might contain bugs.

To quell those concerns, Red Hat will require makers of the software sold through the marketplace to conduct extensive tests to ensure compatibility and provide a written certification of compatibility, the source said.

"It's a good idea," Egbert said. "It shows that virtualization scales. It shows that application vendors are willing to make a bet on what effectively is the first version of a product."