WS, which Red Hat aims at the Unix technical market, is also represented at Pixar and Dreamworks, but it's not the about-to-be-released Red Hat Desktop that's supposed to address a much larger corporate user base, although it's pretty close. The differences between the two are in manageability, security, enhanced user interface and pre-installed third-party packages.

Prudential believes that Red Hat's server leadership "should pave the way to stronger desktop adoption at a quicker rate than many think. Building server applications to scale organizations such as AOL and Electronic Arts is not an easy task. Because Red Hat has shown its capability to run complex applications on the server, we believe the migration to less intense desktop applications should be a relatively trivial task for Red Hat. In addition, Red Hat has been actively working with open source initiatives such as OpenOffice for quite some time to build desktop applications. We look for organizations outside the US to make a quicker move to the desktop."

Judging from the strength of WS, Prudential thinks Red Hat and Novell, which is supposed to be ahead on the desktop, are more evenly matched than imagined and that Red Hat is going to use the next three years, when most of the money to be made is in server migration, to play catch-up and consolidate its desktop position as demand builds.

The brokerage figures Red Hat's desktop will be a viable alternative to roughly 10%-15% of enterprise users in the next two years and that Microsoft's move to the major Longhorn upgrade in ‘06/'07 could prompt companies to look at alternatives.

On the server side, Prudential figures that in Q4 Linux server shipments exceeded Unix shipments by 3.5:1 or 235,000 units to 65,000. It awards Red Hat a 26% attach rate to paid distributions and projects the attach rate reaching 65%-75% in the next few years.

A significant portion of the 2.5 million-3 million Unix servers that are supposed to be installed in the next two-three years will migrate to Linux, it said.

It notes that to meet the swelling demand Red Hat plans to expand its sales force by 40% in the US and Europe this year. Direct sales rep quotas have also doubled to $5 million. Prudential reckons that Red Hat's revenues will grow over the next 12 months at 68%, way better than the vast majority of tech houses.

Red Hat is also figuring on expanding the rest of its people by 30%, up some 200 in FY05 to total 850.

• Red Hat Desktop is First Deliverable of Red Hat's Strategy
• Red Hat Goes for the Desktop