AOL Looking to Acquire Red Hat

Sources have revealed that AOL Time Warner is in negotiations to purchase Red Hat, Inc., maker of the most popular Linux distribution and arguably the only formidable rival to Microsoft's operating system empire. As first reported by the Washington Post, AOL has long been interested in controlling alternatives to Microsoft software, previously buying up Netscape, Winamp and ICQ.

However, ownership of a true Windows competitor -- even one with little market share -- has potentially far greater ramifications for Redmond and marks the first major step by AOL to dislodge the ubiquitous Microsoft desktop.

News of AOL contemplating a similar move last year appeared in a leaked memo examined by BetaNews, which explored options for responding to Microsoft's .NET initiative that "presents a significant risk to the AOL franchise."

Although Linux is open source and freely distributed via the Internet, Red Hat offers enhanced services and support, which makes it one of just a few options for hardware manufacturers who want to preinstall Linux on new computers. Dell Computer dropped the OS as an alternative to Windows last summer citing weak demand. But with the backing of AOL and its 33 million subscribers, Linux could find a quick route to new and existing desktops.

Developing for Linux is nothing new to AOL. The company demoed to BetaNews a Linux-based version of its client running on a Gateway appliance last year at E3, and partnered with Sony to integrate Netscape and instant messaging capabilities into the PlayStation 2.

Early response to the news by Open Source enthusiasts was mixed. While some welcomed the opportunity for AOL to help push Linux to consumers, others were apprehensive and feared Red Hat might be overrun with bundled marketing gimmicks such as icons and AOL content. "What I am worried about is the perception will be when America's biggest Linux firm becomes part of that media machine. Do we really need to have a Linux vendor in the grip of a media company?," said a poster to the Slashdot.org Web site.

AOL and Red Hat were unavailable for comment at press time.

Craig Newell contributed to this report.