BUSINESSWEEK ONLINE : JULY 5, 1999 ISSUE
INFORMATION TECHNOLOGY

Hat in the Air


Despite the excitement over Linux, Red Hat still has major hurdles to overcome:

GETTING USERS TO PAY
Linux is attractive because basic versions can be had for free, and it's reliable. Red Hat has to persuade customers to shell out $40 for its beefed-up version--plus pay extra for technical support and services.

CRACKING THE CONSUMER MARKET
It's a chicken-or-egg thing: Makers of PC programs and games are reluctant to create Linux versions until a consumer market develops. But without applications, consumers will shun Linux.

GAINING CORPORATE TRUST
Linux shines when running computer servers that power simple Web sites. But it's difficult to convince corporations that they should entrust their critical financial data to an unproven operating system.

THE MICROSOFT FACTOR
The software giant has held Red Hat up as a threat to its Windows monopoly--but has done nothing yet to run over the upstart. That could change once the antitrust trial is behind the company.



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