According to a report this weekend in The Washington Post, AOL Time Warner is engaged in talks to buy leading Linux-maker Red Hat Software. If the companies consummate the deal, the acquisition will give AOL an OS to challenge Microsoft's market-leading Windows and will push AOL and Microsoft even closer to what many see as an inevitable showdown. Microsoft and AOL have made many recent moves that often seemed designed to counter each other's expansion plans, but whether AOL has the expertise or infrastructure to tackle the Windows-dominated desktop and enterprise OS markets is unclear.
Founded in 1994 by Bob Young and Marc Ewing, North Carolina-based Red Hat sells the number-one Linux OS and related products and support services. Server and desktop systems worldwide use Red Hat's Linux software, and the company is often at the center of open-source issues and debates, with company executives championing the open-source movement. AOL doesn't currently sell much Linux-oriented software beyond its Netscape browser and AOL Instant Messenger (AIM); the company's best-selling AOL online service isn't available for the Linux OS, for example.
That situation might change, however. If AOL and Red Hat reach an agreement, AOL will likely use Red Hat Linux to try to free itself from Microsoft's desktop control. Speculation abounds that AOL will port its online service to Linux and perhaps even require a mini-Linux environment to be loaded before AOL can run. And AOL's Netscape browser software could easily replace Microsoft's Internet Explorer (IE), which AOL currently uses in its online software.
AOL's sudden move to play in Microsoft's OS pond could be an indirect result of Microsoft's move last month to repel AOL's bid for AT&T Broadband, which would have made AOL Time Warner the largest cable operator in the country. Microsoft financially backed several AOL competitors; Comcast eventually won the bidding process. Of course, the last time a company tried to compete with Microsoft this way, that company lost big time: In the early 1990s, Novell overpaid for WordPerfect and the rights to other office-oriented software so it could compete with Microsoft Office products. That purchase ended in disaster; Novell eventually sold off WordPerfect for a massive loss.