AOL in Negotiations to Acquire Red Hat (PDA form factor)

Dave Long dl@silcom.com
Mon, 21 Jan 2002 10:09:06 -0800


> I think they are interested in RedHat because of near term use in SetTop 
> boxes along with a general long range defense of Xbox, et al. 

Here's a more prosaic, less strategic
interpretation.  (Warning!  I am so
technologically lagging I still use
paper to keep contact information*,
so these numbers are both guesses
and woefully out of date, to boot.
Please correct to FoRK once you all
have stopped laughing)

Let's say AOL has 10 acres of data
center, with a server/square foot.
That's .4m servers, and if RHAT is
to be had for $1.4b, that's $4k per
(existing) box.

Pull a multiplier of 20 out of thin
air, and a RHAT acquisition (even if
it runs the existing business into
the ground) is worth it as a cost
cutting exercise if AOL can save at
least $200 / server-yr in software
licensing & maintenance fees.  Does
anyone have real figures to compare?
(does it make a difference that one
expense is cash and one is stock?)

What would the other options be?
HWP is 15 times as expensive, and
CPQ or SUNW 30 times.  DELL and
IBM are even more spendy, and I
think DELL and GTW don't have OS
people to speak of.

(okay, to be more realistic, SGI
would be a third the price, and
CALD a 30th.  So maybe this isn't
just a back end deal; what sort
of teams do those companies have
left with IRIX / SCO experience?)

-Dave

* one can keep quite a few phone #'s
in small-point type on something the
size of a business card, which can be
carried around easily with a phone,
and can also be updated in the field
with a "pen".  That's an example of
portable read-mostly technology, even
if it is *so* last millenium (or two,
maybe even three...)