The move is sure to increase investor interest in Durham, N.C.-based Red Hat, a Linux-distributor that is expected to go public this week.

Intel {INTC} is an investor in Red Hat, along with Oracle {ORCL}, Compaq {CPQ}, and IBM {IBM}.

Grove underscored Intel’s support of Linux, the open source software program that competes primarily with Microsoft’s Windows NT. Grove said Intel would be helping Linux vendors by giving them speedy access to the source code for Intel’s next-generation Merced chip, building an infrastructure that will help Linux programmers write software for Intel’s new microprocessor, and by making a pool of venture capital available to start-up open source companies that want to develop such applications.

Open source vendors, such as Sunnyvale, Calif.-based VA Linux Systems, Caldera, based in Orem, Utah, and Red Hat, freely distribute the usually secret source code that makes software programs work.

Armed with source code, programmers can improve or modify programs. San Jose-based Dataquest estimates open source Linux will account for nearly $6 billion dollars in server revenue by 2003.

The Linux operating system is also slated to be embedded in a number of other products, such as personal digital assistants and game consoles. Linux is also beginning to make inroads in the desktop computing market.

Grove stepped out unexpectedly from behind an onstage door at the end of a keynote talk given by Intel senior vice president Sean Maloney. Taking the microphone, Grove emphasized Intel’s determination to work with open source programmers to jointly develop software applications for Intel’s Merced chip, the company’s first 64-bit microprocessor. Grove announced that Intel will release the source code for the new chip during Q1 of next year and added the Intel will also install Merced servers in Linux companies so programmers with Internet access can quickly begin writing programs for the new, more powerful chip. "People can actually do development from home or from their offices," Grove enthused.

Grove said Intel’s support of Linux stems from his company’s continuing determination to push down the cost of computers. Because open source software is non-proprietary, it typically costs far less than closed-source alternatives. Instead, open source vendors usually make most of their money selling service, support, and documentation. The fact that Linux’s source code is freely available also means that no one company can control the market or set prices in the absence of competition.

According to Grove, Intel projects a 96 percent increase in demand for computer servers by 2005. Servers are used in internal computer networks and to power web sites. By giving Linux enthusiasts a chance to get a head start writing programs for the Merced chip, Intel will help Linux capture an even faster-growing share of the server market. Grove predicted that Linux systems would be "extremely significant" for e-commerce applications.

Intel's One-Year Stock Performance

One of the things that makes Linux attractive to Intel is how quickly Linux is becoming the operating system of choice for companies developing new multimedia and telecommunications applications.

There are already, for example, several popular Linux-based music programs, including an online jukebox made by Globecom, based in The Netherlands, that helps users quickly create computerized digital music libraries.

Linux namesake Linus Torvalds says Linux’s growing strength in multimedia applications is based primarily upon the heavily debugged software’s superior stability and lower latency periods. Latency refers to the amount of time it takes a software program to execute a command.

"A lot of the competition is so bad in that area," Torvalds said. "Quite often, Linux is much faster." In multimedia or telecommunications applications, a delay of even a few milliseconds could make a large difference in how well a software program performs.