Tuesday, November 20, 2001

Yahoo - Red Hat Proposes to Enhance Microsoft Settlement Offer By Providing Open Source Software to All U.S. School Districts

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Red Hat Proposes to Enhance Microsoft Settlement Offer By Providing Open Source Software to All U.S. School Districts
Open Source leader proposes to provide software to every school district in the United States if Microsoft provides computing hardware for the 14,000 poorest school districts
RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)--Nov. 20, 2001-- Red Hat, Inc. (Nasdaq:RHAT - news) today proposed an alternative to the settlement announced today of the class-action lawsuit against Microsoft. Red Hat offered to provide open-source software to every school district in the United States free of charge, encouraging Microsoft to redirect the money it would have spent on software into purchasing more hardware for the 14,000 poorest school districts. Under the Red Hat proposal, by removing Microsoft's higher-priced software from the settlement equation, Microsoft could provide the school districts with many more computers--greatly extending the benefits Microsoft seeks to provide school districts with their proposed settlement.

Microsoft had proposed that, in settlement of class-action claims of price-gouging, the company donate computer hardware, software and support to 14,000 poor school districts throughout the United States. Under the proposed settlement, a substantial part of the value provided to schools would be in the form of Microsoft software.

The Red Hat's alternative proposal includes the following:

Microsoft redirects the value of their proposed software donation to the purchase of additional hardware for the school districts. This would increase the number of computers available under the original proposal from 200,000 to more than one million, and would increase the number of systems per school from approximately 14 to at least 70.
Red Hat, Inc. will provide free of charge the open-source Red Hat Linux operating system, office applications and associated capabilities to any school system in the United States.
Red Hat will provide online support for the software through the Red Hat Network.
Unlike the Microsoft proposal, which has a five-year time limit at which point schools would have to pay Microsoft to renew their licenses and upgrade the software, the Red Hat proposal has no time limit. Red Hat will provide software upgrades through the Red Hat Network online distribution channel.
A Win-Win Approach

The Red Hat proposal achieves two important goals: improving the quality and accessibility of computing education in the nation's less-privileged schools, and preventing the extension of Microsoft's monopoly to the most-vulnerable users.

``While we applaud Microsoft for raising the idea of helping poorer schools as part of the penalty phase of their conviction for monopolistic practices, we do not think that the remedy should be a mechanism by which Microsoft can further extend its monopoly,'' said Matthew Szulik, CEO of Red Hat. ``Through this proposal all of the states and all of the schools can win, and Microsoft will achieve even greater success for its stated goal of helping schools. By providing schools with a software choice, Red Hat will enable Microsoft to provide many more computers to these schools. At the same time, the schools can accept this offer secure in the knowledge that they have not rewarded a monopolist by extending the monopoly. It's now up to Microsoft to demonstrate that they are truly serious about helping our schools.''

General information about Red Hat's support for education is available at www.redhat.com/opensourcenow/.

About Red Hat, Inc.

Red Hat is the leader in developing, deploying and managing solutions built on the benefits of an open source platform. The open source platform includes the Red Hat Linux operating system for mainframes, servers, workstations and embedded devices, GNUPro tools for developers, database, e-Commerce, secure Web server, high availability server and run-time solutions like eCos and RedBoot. For this platform, Red Hat provides end-to-end professional services including Professional Consulting, Engineering services, Technical Support services, and Global Learning services. Red Hat Network is the premier Internet based service that simplifies and integrates the deployment and management of these offers. More information about Red Hat is available at www.redhat.com. Red Hat is headquartered in Research Triangle Park, N.C. and has offices worldwide. For investor inquiries, contact Gabriel Szulik at Red Hat, (919) 547-0012, x439.

LINUX is a trademark of Linus Torvalds. RED HAT is a registered trademark of Red Hat, Inc. All other names and trademarks are the property of their respective owners.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this press release are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that statements in this press release that are not strictly historical statements, including, without limitation, management's plans and objectives for future operations, and management's assessment of market factors, constitute forward-looking statements which involve risks and uncertainties. These risks and uncertainties include, without limitation, reliance upon strategic relationships, management of growth, the possibility of undetected software errors, the risks of economic downturns generally, and in Red Hat's industry specifically, the risks associated with competition and competitive pricing pressures, the viability of the Internet, and other risks detailed in Red Hat's filings with the Securities and Exchange Commission, copies of which may be accessed through the SEC's Web site at http://www.sec.gov.


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Contact:

Red Hat, Inc. Schwartz Communications
Melissa London Maribel Lopez/Josh Slobin
(919) 547-0012 (781) 684-0770
melissa@redhat.com redhat@schwartz-pr.com

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