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Friday, 15 March, 2002, 12:22 GMT
Making free software pay
Linux, Red Hat
The Linux mascot has much to be cheery about
test hello test
Noble, BBC
By BBC News Online's Ivan Noble
at CeBIT 2002 in Hanover
How do you make a profit when your company gives away its main product for free?

This is the question facing firms selling the Linux computer operating system, a competitor to Microsoft's Windows.

The only way we can make money in this business is in support

Dieter Hoffmann, Red Hat
Because Linux is created and maintained by a worldwide army of programmers - essentially just volunteers - it belongs to no-one and is open to all.

Yet Dieter Hoffmann, Managing Director Central Europe of Red Hat Linux, says his company is turning a healthy profit in what to some might seem a doomed endeavour.

His bullish assessment of the company's, and the software's, future was made at the CeBIT technology fair in Hanover, Germany.

Paying the bills

Red Hat does not own Linux, so it cannot charge for each copy it puts out in the way that Microsoft charges for Windows or Sun charges for Solaris.

"The only way we can make money in this business is in support," Mr Hoffmann told BBC News Online.

"That ranges from training down to system maintenance, deployment and integration with other applications.

"We focus on those customers who are able to pay the bill - the enterprises," he said.

Like its European competitors Caldera and SuSE, US-based Red Hat charges not for the Linux software but for the documentation and helpline support that goes with it.

Tough competition

Red Hat's success is down to the fact that it has persuaded big companies to move some of their operations over to Linux, charging for the help it offers in doing so.

Mr Hoffman admits Linux has a tough time competing with Microsoft's Windows as a desktop operating system for home and business users.

It still does not have the slick feel of Windows and non-professionals are likely to find it harder to configure. But, as he points out, many more people are using Linux than actually realise it.

The system runs on machines ranging from giant "big-iron" mainframe computers to the tiny computers at the heart of television set-top boxes.

In-car systems

It even runs on handheld personal digital assistants and at the heart of car entertainment systems.

And on the computers carrying out the donkey work of information technology, moving files to printers, sending out web pages, and hosting databases, Linux is a common sight.

The German Government has just completed a study into the benefits of increasing Linux use and the British Government is quietly examining its options too, Mr Hoffman says.

IT students are keen to work with Linux because they can download and use it at home for free.

"Customers are telling us that the people they are hiring are already coming with Linux knowledge," says Mr Hoffman.

In little over 10 years, the alternative OS with a penguin mascot has turned from a Finnish student's educational experiment into seriously big business.

BBC News Interactive reports from the CeBIT technology fair in Hanover





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11 Jan 02 | Sci/Tech
Linux in the hand
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