Red Hat Stands Alone, For The Better - InformationWeek

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3/27/2009
12:19 PM
Serdar Yegulalp
Serdar Yegulalp
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Red Hat Stands Alone, For The Better

After Red Hat's last round of positive numbers, Citigroup issued a report that the flagship open source company is a "tempting acquisition target". To which I can only reply: Here we go again.

After Red Hat's last round of positive numbers, Citigroup issued a report that the flagship open source company is a "tempting acquisition target". To which I can only reply: Here we go again.

It's not that I think Red Hat isn't a great company, or that their stock value doesn't reflect their actual worth. I'm objecting to the largely unspoken assumption that the best thing that can happen to any company that deals in open source is for them to be acquired somewhere down the line. Isn't there something disingenuous in such thinking? "Open source is indeed a fine component of a business model -- provided someone else is paying your bills for you."

Pardon the pun, but I don't buy it. If Red Hat has done this well for themselves -- not just financially, but in terms of clout, respect, and being a consistent leader in their industry -- what could compel them to think they could do better by being bought? As Jim Whitehurst himself put it, Red Hat benefits by being an island (or, rather, a "Switzerland") unto itself. Being someone else's property wouldn't give them any particular advantage that they don't already have or which they can't grow on their own -- the right way.

So what about the possibility that someone else wants to land Red Hat as an acquisition because it'll look like a good feather in their own cap? There's nothing stopping anyone from doing that -- but if they try, they're going to quickly realize that Red Hat is a lot scrappier than they might anticipate. I'm not counting out the possibility that Red Hat might willingly partner with a company that it sees as a peer -- but, again, who would they see as a peer, someone they would be willing to not only ally themselves with but intertwine themselves with, become codependent with?

If someone can come up with a compelling reason why Red Hat would even need a suitor right now, they welcome to. I know I can't. I didn't expect to, either.


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