The company is pitching the stuff as more secure, reliable and manageable than Microsoft and figures it's got a better chance of exploiting Europe's disaffection with Microsoft and its honeymoon with Linux.

Red Hat evidently has a good shot at nailing business from LVM, one of Germany's biggest insurance companies, which is thinking of trading in its home-brewed Linux desktop used on some 8,400 PCs. The company is piloting Red Hat Desktop.

In a canned statement Red Hat said, "Open source is now causing the enterprise to question traditional models of software and software availability. This is an architectural alternative that extends from devices, through the network, and into the data center, deployable and flexible without concern of lock-in."

Whatever it says demand is still pretty tentative and some of the smart money on Wall Street think it will never amount to much.

Red Hat is hoping the cash in on the PC replacement cycle and the next eventual Windows upgrade to the belated Longhorn, not due now until 2006 if Microsoft is lucky.

Microsoft this week said that it had sold 210 million copies of XP since the OS launched in October of 2001, up from 130 million last July. It's installed in roughly 65% of businesses.

Red Hat's focus on Europe puts it up against native Linux houses, the Novell-owned SUSE, a German company before its acquisition, and Paris-based MandrakeSoft, both of which have desktop products. Novell is hot to get on the desktop.

The new operating system, which the company described as the "first deliverable" in its client strategy, will run on both x86 and those newfangled AMD64 or Intel EM64T boxes, supporting systems with up to 4GB of memory.

Red Hat, which abandoned the retail desktop market last year, wants to sell the stuff to the enterprise and commercial markets - including government and the academe - but allows that it might pick up small and medium business environments.

Red Hat's desktop entry signals the first time it has taken Microsoft on directly. Red Hat's server push has been to replace Unix.

Red Hat is bundling the desktop OS with Red Hat Enterprise Linux AS, Premium Edition for the Network Proxy or Satellite Server inside that will do mass deployment. Red Hat also contemplates selling the desktop to folks who already have the Proxy or Satellite Server and has made allowances in its pricing schedule for that.

A $2,500 Proxy Starter Pack comes with 10 Desktop licenses and the $13,500 Satellite Starter Packs comes with 50. And then there's a $3,500 50-license Extension Pack for sites that already use Red Hat on the server.

There is no standalone desktop package. Red Hat's client strategy is an extension of its server interests, which makes it more robust. The client is a subset of Red Hat Enterprise Linux 3.0, which isn't out yet.

Under the terms of the subscription, users get Desktop updates and Web-based support for a year. The support and updates, which come via the Red Hat Network, can be extended in yearly increments for five years except for the Extension Packs.

Red Hat Desktop is using Mozilla for a browser and Novell's Outlook-looking Evolution for an e-mail client. It's cost-effectively packaged with the freebie OpenOffice.org 1.1 to threaten Microsoft Office as well as Windows.

It's also got GAIM instant messaging, Agfa Monotype fonts, the Adobe Acrobat Reader and plug-in, the Macromedia Flash plug-in, Java, both IBM's and BEA's, the Citrix ICA client and RealNetworks' Real Player.

VMware's desktop widgetry is supposed to support the new Red Hat OS within 90 days of release.

Red Hat says the Desktop will be on a predictable 12-18-month upgrade cycle, synchronized with Red Hat Enterprise Linux, which would mean the next one is due in 2005 along with Red Hat Enterprise Linux 4.0.

Future iterations are supposed to concentrate on productivity and interoperability.

Besides its desktop plunge, Red Hat is also working with Wind River, the embedded maven, on widgetry for thin clients and devices that's based on Red Hat Enterprise Linux, giving it a top-to-bottom lineup.

• Red Hat Desktop is First Deliverable of Red Hat's Strategy
• Wall Street Rates Red Hat's Desktop Chances