Red Hat and Compaq Partner to Provide Worldwide Enterprise Support for Official Red Hat Linux Operating System

DURHAM, N.C.---October 18, 1999---Red Hat®, Inc. (NASDAQ: RHAT), the leading provider of open source Linux-based operating system (OS) solutions and Compaq Computer Corp. (NYSE: CPQ) today expanded their strategic partnership to provide call center support for enterprise users worldwide of the Official Red Hat Linux OS.

Under the agreement, Compaq's Customer Services organization, which serves hundreds of thousands of organizations in more than 100 countries worldwide, will escalate the most advanced support issues to Red Hat's services and support organization. As Compaq modifies and optimizes the Red Hat Linux OS during the support process, Red Hat will evaluate and test these changes, make them available in future revisions of the OS and deliver them freely to the entire open source community under the GNU General Public License (GPL).

"Compaq has one of the most powerful, worldwide call center support operations. This agreement combines Compaq's hardware and networking expertise and Red Hat's superior development expertise in open source software solutions," said Bob Young, chair and CEO of Red Hat, Inc. "At the same time, Compaq and its customers -- some of the most innovative users in the world -- will be contributing to the growth and development of Linux-based operating systems under the open source model. This is a perfect example of how commitments to open source by major software and hardware vendors like Compaq and Red Hat can further propel the benefits of Linux-based operating systems to enterprise organizations worldwide."

The agreement expands the relationship between Red Hat and Compaq, which included an equity investment earlier this year from Compaq and joint marketing, development and certification to maximize compatibility and interoperability with Compaq's Tru64 Unix OS and Alpha Server and Proliant server and workstations. More information on Red Hat's partnership with Compaq can be found on the Web at http://www.redhat.com/about/1999/press_compaq.html and http://www.redhat.com/about/1999/press_industryleaders.html.

"To support our customers ever-increasing deployment of Red Hat Linux into business critical environments, Compaq will introduce its suite of services for Red Hat Linux," said Peter Mercury, Vice President of Compaq Customer Services. "With this agreement, a key building block is in place for Compaq to support customers deploying Red Hat Linux in Internet, high performance technical computing and other applications where non stop availability is required. Additionally, joint support from Compaq and Red Hat Linux will eliminate many of the finger-pointing problems customers typically face between hardware and software vendors."

The financial terms of the agreement are not being disclosed by either company.

Open Source Momentum
International Data Corp. (IDC) research states that Linux was the fastest-growing server operating environment in 1998, growing more than 190 percent in that year alone and capturing more than 15.8 percent of the 4.4 million revenue shipment server operating systems market. Additionally, IDC states that of all Linux server installations, Red Hat Linux is by far the preferred distribution among 68.7 percent of U.S. Linux users.

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

About Red Hat, Inc.
Founded in 1994, Red Hat (NASDAQ: RHAT) is the market leader in open source operating system (OS) software and services. Along with its award-winning open source Red Hat Linux OS, Red Hat offers a full line of services, including telephone support, on-site consulting, developer training, certification programs and priority access updates, making Red Hat a leading and complete resource for knowledgeable, innovative, mission-critical open source solutions.

Red Hat shares all of its software innovations freely with the open source community under the GNU General Public License (GPL). The Official Red Hat Linux OS and related services are available directly from the company and through its partner, distributor and reseller programs, which include top PC and server manufacturers such as Compaq, Dell, Gateway, IBM, Hewlett-Packard and Silicon Graphics.

Red Hat and the Official Red Hat Linux OS have received industry praise. Recent accolades include: Red Herring's Top 100 Companies of the Electronic Economy, Upside's Hot 100 Companies, Network World's 10 Companies to Watch, Federal Computer Week's Government Best Buy, Software Development's Jolt Award and InfoWorld's Product of the Year for three years in a row. Red Hat was also voted a "LinuxWorld Favorite" by the attendees of the two most recent LinuxWorld Expos, winning Best Server Distribution at the August show.

Red Hat is based in Durham, N.C. and has offices worldwide. Visit Red Hat on the Web at http://www.redhat.com/. For investor inquiries, please contact Lippert/Heilshorn at (212) 838-3777.

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, statements regarding current or future financial performance, management's plans and objectives for future operations, product plans and performance, management's assessment of market factors, and statements regarding the strategy and plans of the Company and its strategic partners, constitute forward-looking statements. These forward-looking statements are not guarantees of the Company's future performance and are subject to a number of risks and uncertainties that could cause the Company's actual results in the future materially to differ from the forward-looking statements. These risks and uncertainties include, without limitation, risks associated with the Company's ability to successfully shift its business model to a model built upon subscription-based product offerings, the Company's ability to attract new enterprise customers and to meet their needs by expanding and enhancing its service offerings, the need to continually enhance the Company's Web site and the ability to generate significant revenues from it, challenges associated with the Company's domestic and international expansion, the Company's ability to enter into new and retain existing strategic alliances with technology leaders, the continuing need for an increasing number of Linux-based enterprise applications, the Company's dependence upon an open source business model, reliance upon independent third-party Linux developers, management of growth, expansion of the Company's business focus, the possibility of undetected software errors, the enforceability of the GNU General Public License and other licenses under which the Company's products are developed and licensed, the risks of economic downturns generally, and in the Company's industry specifically, the risks associated with competition and competitive pricing pressures, the viability of the Internet, year 2000 compliance efforts of the Company and of third parties on which the Company depends, and other risks detailed in the Company'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/.