United States, January 31, 2001

End-to-End Strategic Agreement Includes 8,000-store Open Source Installation, Multi-Tiered Support and Future Development

Red Hat, Inc. (Nasdaq:RHAT), a leader in
developing, deploying and managing open source Internet infrastructure,
today announced that Daiei Information System Co., Ltd. of Tokyo, Japan
has chosen Red Hat Japan to provide a comprehensive system of end-to-end
open source solutions for the company and its subsidiaries and

As previously announced, DIS plans to install a total of more than
fifteen thousand Red Hat Linux systems inside the (Daiei group) Lawson
convenience store chain, which includes approximately seven thousand six hundred stores nationwide. Red Hat Linux 7J, the Japanese-language version of Red Hat's most recent distribution, will replace Microsoft Windows,
enabling Lawson's in-store customers to download multimedia content such
as music and movies from terminals throughout the stores. Red Hat, which
maintains the largest open source market share in both the United States
and Japan, and its Japanese subsidiary, RHJ, supplier of Red Hat Linux
in Japan, will provide support and services for the Lawson installation.

As another key piece of the agreement, DIS has built its internal Linux
development environment around Red Hat Linux, and already uses more than
200 Red Hat systems internally. RHJ will provide engineering expertise
with the GNU development environment for DIS's future technology
development. Also, using the experience gained from the Lawson
installation, DIS will become a strategic integration partner for Red
Hat in Japan. The company plans to aggressively develop Red Hat-based
open source solutions for other Japanese businesses, with RHJ contracted
to provide full technical support.

"Daiei Information System chose Linux for its stability and superior
reliability, and a careful study of Linux suppliers revealed that Red
Hat leads the pack in technical ability, support services and
reliability," said Hidefumi Sano, Senior Vice President of DIS.
"Through this extensive strategic agreement, Red Hat has showcased its
ability to provide open source solutions that truly span across the
enterprise-- an ability that can now be extended to businesses
throughout Japan."

"Red Hat's strategy to provide complete open source solutions spanning
across the enterprise from Internet infrastructure to handheld devices
continues to be an enormous differentiator for partners like Daiei
Information systems," said Matthew Szulik, CEO of Red Hat. "Red Hat is
the unmistakable brand and market leader in the United States, and now
Japan has also embraced Red Hat as the de facto standard for Linux and
other open source solutions."


About Daiei Information System Co., Ltd.

Daiei Information System (part of the Daiei group), founded in 1985, is
a provider of distribution solutions, and supports network business,
which provides connections between manufacturers, retail stores and
consumers. DIS established its extensive and dynamic SCM (Supply Chain
Management) system-configuring technology by applying their original
advanced Web-EDI technology, based on extensive know-how gained from
experience in chain-store system development. SCM systems enable users
to enhance communications efficacy between companies, including business
meetings, master registration of commodities and inventory control, and
exchange of POS information. DIS positions this system- configuration
technology as its core business. It is establishing a perfect business
organisation including consulting and support in order to meet the
increased needs of Internet-based information systems configuration.

DIS is also a total-solution provider and has held exhibitions and
seminars aimed at system management engineers or potential users
considering adopting SCM systems for their organisations. DIS has earned
a high reputation from companies in a variety of fields. Detailed
information about DIS's organisation, products, and service can be found
on their web site:

About Red Hat, Inc.

Red Hat (Nasdaq:RHAT) offers users one single, trusted point of contact and a common plaform for developing, deploying and managing open source across Internet infrastructure and devices that connect to the Internet, ranging from small embedded devices to high availability clusters and integrated Web server/ecommerce OSes. The Red Hat Network, Red Hat's unique management technology, helps companies worldwide easily manage it all by delivering open source products, service, support and information on-line in real-time.

In addition to the award-winning Red Hat Linux server operating system, Red Hat offers Stronghold Secure Web Server and Credit Card Verification Software for secure e-commerce and is the principal provider of GNU-based developer tools and support solutions for a wide variety of embedded processors. Red Hat also provides run-time solutions such as Linux, eCos, Red Hat Embedded, the award-winning RedBoot, custom engineering services, support and training to organisations in all embedded and Linux markets.

Red Hat is headquartered in Research Triangle Park, N.C. and has offices
worldwide. For investor inquiries, contact Gabriel Szulik at Red Hat,
+1 919-547-0012.

Red Hat Europe was established in July 1999 with its European
headquarters based in Surrey, United Kingdom and offices throughout
Europe. Red Hat Linux is sold and supported through a number of major
distribution and industry partners throughout Europe and from

Red Hat Linux was named InfoWorld's Product of the Year for four years
in a row, was given a productivity accolade in Software
Development's Jolt Awards, was named an environment/desktop finalist in
the Ziff-Davis European Excellence Awards, won the editor's
choice awards from the Linux Journal and Australian Personal Computing
magazines, and won the `Just Plain Cool' award from Australian
Personal Computing magazine. At March's LinuxWorld Expo, more than 8,000
members of the Linux community voted Red Hat a
`LinuxWorld Favourite'. Red Hat Linux recently won a Product Excellence
award from Software Development Magazine.



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