Home > In the News > Dell Invests 99.5 Million USD in Red Hat Dell Invests 99.5 Million USD in Red Hat Submitted by Tony Caduto 2005-05-11 In the News 27 Comments Through his private investment firm, PC Tycoon Michael Dell has invested $99 Million in Red Hat recently, according to an SEC filing. About The Author David Adams Follow me on Twitter @david_adams 27 Comments 2005-05-11 6:29 pm It is only rumors so far but one of my friends who has worked for Dell as a management consultant for about eight years has hinted the same thing: Dell has gained considerable leverage against Microsoft and might want to modify their contract in order to be able to offer notebooks and desktops with a choice of pre-installed Linux(Red Hat?) at a considerably more competitive price by late Summer/Fall 2005. 2005-05-11 6:37 pm i’ve heard pretty much the same thing from a good source. that might be a possible explanation for Dell’s recent involvement with Red Hat. i wonder why Dell doesn’t just buy Red Hat if they want to use Red Hat or Fedora Linux for their computers anyways. perhaps Michael Dell wants to be personally invested first to get Red Hat shares at a low price. 2005-05-11 6:46 pm Does this mean that I’ll be able to get ACPI/APM finally working properly on my Inspiron 8200? John 2005-05-11 6:54 pm >>//Does this mean that I’ll be able to get ACPI/APM finally working properly on my Inspiron 8200?// we can only dream. I don’t think this “investment” necessarily has any plot to start using Linux on Dell PCs. If that were the case Dell wouldn’t be so anti Linux as they are right now and they’d have working Linux drivers for acpi/apm and the various Dell specific FN keys that make up a laptop. Michael Dell is simply an entreprenuer who enjoys investing in technology and seeing what happens. 2005-05-11 6:59 pm … to rephrase your title, since it was not Dell, the company, but Dell, the Man… Although the title is correct, can be somewhat misleading. 2005-05-11 7:11 pm http://www.emperorlinux.com/ Highly recommended. You pick the hardware/software configuration. The Rhino and I know. 2005-05-11 7:18 pm this can only be good. 2005-05-11 7:25 pm My Inspiron 8200 is an awesome linux machine and absolutely EVERYTHING works perfectly fine. Depending on what distro you use the only thing you might need to do “by hand” to make ACPI/APM work is to use the swsuspend2 patch. In terms of Dell planning on offering pre-installed Linux machines in Fall you bet that Dell is making sure that everything works fine. In fact, one of our students will be working at Dell in their Irvine office for the summer to do some of the testing… It is funny to see Dell suddenly working towards satisfying the demand for Linux they so far claimed didn’t exist. 2005-05-11 7:34 pm Being a Fedora user, I for one welcome our new Dell overloards. Perhaps plug and play for my palm pilot will finally work out of the box with Redhat linux someday. 2005-05-11 7:43 pm I also have a 8200 dell laptop, but I use NetBSD 2.0, the only hardware it does not detect is the internal modem (well, even XP pro needs drivers for it to work there). I still remeber the first time I started KDE eared the musical theme it uses when finishing loading and I said: Wow, sound card detected and working right out without me having to configure anything!!! That was a good sign. 2005-05-11 7:43 pm If you are going to use a crappy, dead, slashdot joke… then please at least spell it correctly.. 2005-05-11 7:44 pm i actually dont like dell, or red hat. but i still view this as a good thing. anything that helps the linux comunity. 2005-05-11 8:18 pm Dell+Red Hat servers have been becomming pretty much an industry standard by replacing big iron UNIX (Sun/Solaris) at cheaper prices for years. I am pretty sure this move has more to do with the server market than the desktop market. Dell and Red Hat today have a very close relationship as it is. I am kind of surprised a move like this didn’t happen sooner. 2005-05-11 8:19 pm I think he meant overlords, not overload.. 2005-05-11 8:24 pm ..unless someone has proof that Micheal Dell himself was reposible for this investment. The investment could have been made on his behalf by someone else, if he made all the investment decisions himself why would he need a private investment firm? 2005-05-11 9:13 pm When you’re used to running industrial RISC servers in production, the term “overload” in relation to Dell x86_32 servers might not be too much of a faux pas. COntext: “My company switched from SunFire 6800s to Dell rackmount servers to save money, right before they canned me. I, for one, welcome the new Dell overloads….” 2005-05-11 9:32 pm Dell+Red Hat servers have been becomming pretty much an industry standard by replacing big iron UNIX (Sun/Solaris) at cheaper prices for years. Dell+Redhat does not compete with “Big Iron” Unix boxes. You do not replace your 32×32 Superdome with a 8 way Linux PC server. Linux is however competitive on the lower end servers especially the web server and web application(i.e. Weblogic) arena where a $300,000 Unix server resource would be wasted. 2005-05-11 10:30 pm I’ve just bought a notebook but if Dell would have offered the Inspiron 9300 with Linux pre-installed and it wasn’t $150 above my budget because of the “Microsoft tax” Dell includes in the price I would have bought one. Hopefully next time… 2005-05-11 10:41 pm Kind of a drop in the bucket. I assume it is only for a greater price break on (tradename and trademark restricted) linux company products. That is usually the only reason the Round Rock company does anything. 2005-05-12 2:44 am Why not 100? Huh. 2005-05-12 6:32 am Oh great, now that linux was finally picking up the pace. it such got dull, when dull kinda in a secret way bought out redhat. the price seems about right for redhat buyout. 2005-05-12 10:17 am Here is the full story – http://msnbc.msn.com/id/7787642/ It’s new because it was just reported, but old in the sense that it appears from the story that the investment was actually made in Jan 2004. Here’s an interesting snippet from the article: In a filing with regulators April 27, Red Hat said MSD Capital’s $99.5 million worth of debentures would be converted into 3.89 million shares of the Raleigh-based company, led by CEO Matthew Szulik. At the stock’s current price, those shares would be worth about $42.6 million. The investment has lost value because Red Hat’s shares have fallen by about 44 percent since the purchase was made in January 2004 and currently trade at about $10.95 per share. 2005-05-12 10:49 am That is correct and that’s about when the whole talk about offering Linux pre-installed machines at Dell internally started. Now they are suddenly more outspoken about it. Apparently Gateway is also jumping on the Linux bandwagon in terms of pre-installed systems sometime later on this year but not with Red Hat. 2005-05-12 1:25 pm This investment whas made in 2004 , by MSD Capital LP ( http://www.msdcapital.com ), MSD stands for Michael and Susan Dell ( dont quote me on that I am guessing from the foundation name : http://www.msdf.org ). What’s MSD CAPITAL : http://www.msdcapital.com/qanda.html “Q: Do you manage money other than Mr. Dell’s? A: No. We exclusively manage Mr. Dell’s personal capital.” The investment whas of 100 million but Red Hat lost some value hence the investment is now valued at 99.5 million. Does Dell capital investment firm invested in Red Hat or control Red Hat : the answer is no , they bought the debenture ( wich is a term for selling your profit/income before it actually happen for some money , now , wich are protected by the stocks ). Does this Means Dell will start supporting GNU/Linux more ? NO, I dont think so. Dell as been selling Red Hat server solution since 1999 – 2000 , they had some desktop offer and made a small Desktop deployment around 2000 too , but it whas a failure and so whas terminated in 2001 ( poor sale , really poor marketing by Dell standards , almost no demand for Red Hat desktop at all ) , Red Hat is loosing really badly on the public dekstop , thats why they created Fedora even do they are a 3 billion USD company. ( Interesting fact , is Dell whas started with an investment of 1000$ , by Michael Dell in his dorm room , he only asked for investment once for an amount of 50 million USD , Dell as always been profitable ) Microsoft also put pressure on them with the Prefered partner contract for Windows OEM , since then Dell as made no general public offer of GNU/Linux offer on its desktop. http://iwsun4.infoworld.com/articles/hn/xml/01/08/02/010802hnnolin…. http://www.theregister.co.uk/2001/08/03/dell_ends_great_linux_deskt… http://www.theregister.co.uk/2002/03/19/microsoft_killed_dell_linux… Dell Linux strategy : http://search.dell.com/results.aspx?cat=all&s=gen&c=us&l=en&cs=&k=l… http://linux.dell.com/ http://linux.dell.com/blog/ Info about Michael Dell : http://en.wikipedia.org/wiki/Michael_Dell http://www1.us.dell.com/content/topics/global.aspx/corp/biographies… What kind of computer does Michael Dell have? http://www1.us.dell.com/content/topics/global.aspx/corp/michael/en/… 2005-05-12 4:27 pm To my knowledge all of the above details are correct, however, here are some clarifications: 1.) Dell was offering Red Hat only for corporate desktops and is continuing to do so. 2.) Demand for corporate desktops with Red Hat has only been relatively low because of extremely poor, not to say non-existant marketing by Dell. 3.) The Dell management has learned from their mistakes and is persuing an entirely new direction by presenting Linux as the big new thing and offering it is a pre-installed option on both consumer and corporate systems while reducing consumer prices to more competitive levels by bypassing Microsoft Windows licensing fees for those system. 4.) The main reason this has become possible is because Dell has gained significant leverage in re-negotiating their licensing contract with Microsoft as far as being able to sell “blank”(meaning Linux) systems through a “subsidiary” of Dell which still uses the same familiar portal and channels. The time frame given for this is Q3 2005. 2005-05-12 6:36 pm @ Dr. Bob Richards (IP: —.wireless.csail.mit.edu) No , I whas 100% right in what I said your discussing something else and something “related” and your right on something and tottaly wrong on others. “1.) Dell was offering Red Hat only for corporate desktops and is continuing to do so.” No , in 2000 – 2001 it whas a public offer on some low level model and really hidden. But your right to say that Dell “offer” corporate desktop for the right price and for the right numbers. http://news.com.com/Linux+slips+off+Dell+computers/2100-1001_3-2710… “2.) Demand for corporate desktops with Red Hat has only been relatively low because of extremely poor, not to say non-existant marketing by Dell. ” No , well Dell is to blame too on there “own hardware” , there is much more to computer notebook and desktop then just Dell , but the Corporate Desktop product is from Red Hat they are a 3 billion USD company , I have seen more publicity coming from Linspire 40 Million company since 2000 then from Red Hat about the desktop since 1995. Its a Red Hat product , they got the money and means to really push it. “3.) The Dell management … has fees for those system. ” I seriously doubt that the Dell Management as learned from there mistake on GNU/Linux on the desktop , Most of them dont even know what GNU/Linxu is , yes its “probably” avalaible but is real hassle to get it if your not smb or a corporation. Its not even included in there pull down menu or selection. Time will tell as always. “4.) The main reason this has become possible is because Dell has … given for this is Q3 2005.” You are kidding yourself , Microsoft will pull the prefered price from Dell as soon as they see there brand name with GNU/Linux on the desktop , there is too much money involved and Dell cant compete if they dont have the prefered price : http://business.newsforge.com/article.pl?sid=04/07/07/1755223 See the above article follow the bottom links , it will happen again. I suspect someone will do what you say but it will not be the same as if Dell does it. Dell is more then the computer its and incredible complete package with Hardware + Software + service + Financing with the company that is built to deliver, its getting really lazy lately but its because no one can match them even in a lazy state. I doubt some lowly resaller even a big name can match Dell or follow in its trail, even HP + compaq or IBM could not … I am sorry but the best service you could do for this Dell “resaller” is to say who it is and say exactly what they will offer , so as to stop most of us from buying something else , it will build up momentum and anticipation , just like Apple did with there Mac OS X Tiger. I have seen too many “we support GNU/Linux press release and fake annoncement or people trying to make themself look bigger that where ultimately unable to deliver on there promise. Q3 = July , so the time to start talking about it is now. If you could provide detail about how you know this and what are your ties with it, it would shed some more light on it , and also tell us a bit about yourself. Otherwise I am going to assume your talking out of your behind, I have seen too many Gnu/Linux related vaporware. I have no love for Red Hat at all ( the company the community Red Hat/Fedora is nice ) , they have blocked GNU/Linux everywhere where they are not ready ( this mean everything outside big companies and server, where even there , there own offer need a lot of improvments ), they have add too much money invested in them for what they give , Most of the money invested whas spent on “other things” ( look up Red Hat founders and what they did with the money they got ) There is two company I trust and that you should too , they lead by example : Mandriva and Canonical. All the rest of GNU/Linux ( the worst is Debian in my book and Canonical shows why , some people should really research Debian history and the Debian foundation ) dont deliver at all on any of there promise. Moulinneuf : #1 GNU/Linux expert and #1 GNU/Linux D’Historian since 1991. 😉 2005-05-12 10:18 pm As far as I can tell this has nothing to do with DELL as a company, the dude, or what have you. It has to do with the founder as a private individual. Reminds me of Bill Gates back in the 80’s. Hmmmm…..