RED HAT AND IBM DRIVE LINUX TO THE HEART OF THE ENTERPRISE

Raleigh

United States, December 7, 2000

Red Hat Extends the Reach of Linux-based e-Business With Introduction of New IBM Software Infrastructure Packages

Red Hat Europe, the leader in developing, deploying and managing Open Source Internet infrastructure, today extended the reach of Linux-based e-business in the enterprise through the introduction of new IBM software packages that address the key phases in the development of e-business infrastructure.


Following October's announcement of Red Hat Linux support for the entire IBM eServer line and all of IBM's Linux-enabled software, Red Hat's new software package offerings will increase the range of options for enterprises of every size wishing to deploy their mission-critical e-business applications on Linux.


"Through close collaboration, IBM and Red Hat are already seeing the increased impact that Linux is making in the enterprise," said Launy Vang Andersen, vice president enterprise server business development, IBM Europe. "Both IBM and Red Hat believe that Linux is ready for prime-time enterprise deployment today, and the introduction of these new e-business infrastructure packages will give an even wider variety of companies the support they need to grow their mission-critical
applications on the Linux platform."


In Q1 2001, Red Hat will have the following IBM infrastructure software solutions available through its channel and on their website. These bundles, the first of a series, which will be followed by key IBM DB2 Universal Database and WebSphere Application Server software solutions for the enterprise, are a key part of the ongoing collaboration between Red Hat and IBM.


Red Hat Domino Bundle, the integrated messaging, collaboration and Web application software platform for growing companies. Including:

Lotus Domino R5 Application Server, 25 Lotus iNotes CALs, Red Hat Linux 7 Professional,
Estimated street price: USD3,999


Red Hat Linux Small Business Suite, the cost-effective solution pack for small businesses with fewer than 100 users. Including:

Lotus Domino R5 Application Server, IBM DB2 Workgroup Edition, IBM WebSphere Application Server (Standard Edition), WebSphere Homepage Builder, WebSphere Studio, Red Hat Linux 7 Professional, Estimated street price: USD599


"IBM and Red Hat have a strong relationship that dates back to the early days of our company and has expanded several times, and we see this announcement as reinforcing IBM's commitment to Linux and to Red Hat," said Colin Tenwick, vice president and general manager, Red Hat EMEA ``There is a growing demand for solution-based products and our new offerings will give our customers the best possible foundation on which to build their Internet infrastructure. As the world's
market leader in Open Source and Linux technology, Red Hat is now able to provide a total e-commerce solution jointly using IBM's technology and Red Hat's operating system and services."


Red Hat and IBM entered an agreement in August 2000 ("IBM and Red Hat Collaborate to Deliver e-business Software Solutions for Linux'') to jointly market, distribute and support bundled IBM, Lotus and Red Hat software offerings.


To further enhance these software solutions for businesses Red Hat have launched official Red Hat Training and Official Red Hat Support in a "box". These two new offerings will be available via the channel and the website. End-users now have the ability to purchase their total Red Hat Linux solution from the channel.


Open Source Momentum
International Data Corp. (IDC) research states that paid Linux shipments grew faster than any other server operating system over the past two years, and their preliminary figures for 1999 show Linux shipments hold 24.6 percent of the server operating system market, up from 15.8 in 1998. IDC also states that Red Hat holds 50.2 percent of Linux vendor market share and that Red Hat Linux is by far the most popular distribution, preferred by 68.7 percent of U.S. Linux users.


Research firm Netcraft, Inc. (http://www.netcraft.com ), states that as of May 2000, 30 percent of all public Web sites run on Linux-based operating systems, making Linux the most popular choice for deploying public Web sites. IDC research shows 40
percent of all spending on Linux servers is for Internet related applications, firmly entrenching Linux servers in the Internet infrastructure.


Finally, IDC predicts that by 2002, there will be more than 55 million handheld and notebook-style information appliance devices and that by 2005, shipments of these appliances will exceed shipments of PCs.


Red Hat's numerous alliances with industry leaders and the demand for Linux-based applications has created open source support from many of the industry's leading software and hardware manufacturers, including Dell, Compaq, Computer Associates, Hewlett-Packard, IBM, Intel, Netscape, Novell, Oracle and SAP.


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*The IBM eServer brand consists of the established IBM e-business logo with the following descriptive term "server" following it.


The IBM e-business logo, xSeries, iSeries and zSeries are all trademarks of IBM Corporation.


About Red Hat, Inc.


Founded in 1994, Red Hat (Nasdaq:RHAT), is the leader in development, deployment and management of Linux and open source solutions for Internet infrastructure ranging from small embedded devices to high availability clusters and secure web servers. In addition to the award-winning Red Hat Linux server operating system, Red Hat is the principle provider of GNU-based developer tools and support solutions for a wide variety of embedded processors. Red Hat provides run-time solutions, developer tools, Linux kernel expertise and offers support and engineering services to organizations in all embedded and Linux markets.


Red Hat applies its technological leadership to create open source solutions for all points on the Internet and in pervasive computing environments, offers services backed by the best understanding of open widely trusted open source leader and corporate partner. Red Hat offers users one single, trusted point of contact and a common platform for developing, deploying and managing open source across the Internet and devices that connect to the Internet.


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 http://www.europe.redhat.com/shop


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.


LINUX is a trademark of Linus Torvalds. RED HAT is a registered trademark of Red Hat, Inc. UNIX is a registered trademark of The Open Group. 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, product plans and performance, the ability of Red Hat to attract users to redhat.com, the lack of demonstrated widespread acceptance of e-learning as an effect training tool, 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.


* Indicates trademark or registered trademark of Linus Torvalds.

** Indicates trademark or registered trademark of Red Hat, Inc.


*** Indicates trademark or registered trademark of IBM Corporation and/or its subsidiaries.