Major Linux distribution vendor Red Hat has spent $107 million to buy privately held Qumranet in an effort to expand its virtualization business. Under the deal, Qumranet's employees and open source communities will join Red Hat.

Raleigh-based Red Hat says its purchase of Qumranet, which is based in Israel, will enable it to offer ''a comprehensive virtualisation platform'' for business customers. That will help Red Hat compete with other companies in the space, such as Microsoft, Citrix and VMware.

Virtualisation technology essentially separates computer resources from one another. Applications that are usually tethered to specific operating systems, for example, can run on any computer. Computers can run their operating systems remotely. Data storage isn't tethered to a specific server or hard drive. That, in turn, reduces the amount of money companies have to spend on computing resources, making virtualization increasingly popular in the business world.

"Virtualisation is in its infancy," Paul Cormier, president and executive vice president of products and technologies at Red Hat, said. "In one respect, we don't even separate virtualisation from the operating system. We think the operating system with virtualization is the next-generation operating system."

"This really moves us into the next generation virtualization arena and provides the ability for us to drive it and make it ubiquitous across every server," Cormier added, "Virtualisation is just part of the plumbing."

''This acquisition advances Red Hat's efforts to transform the virtualisation market and drive comprehensive virtualisation technology and management solutions into every system, from servers to desktops, on both Linux and Windows,'' the company says in a statement posted to its Web site.

Red Hat says its purchase of Qumranet will enable it to package Qumranet's technology, known as KVM, with the Red Hat Enterprise Linux software. Enterprise Linux, an operating system for businesses, is Red Hat's core product. The company makes money by selling services for the product.

The focus on KVM is a change of pace for Red Hat, which had been focusing its efforts on a competing open-source virtualization platform called Xen. However, in a reversal of sorts, Red Hat rival Citrix bought the company that hosts Xen, known as XenSource, in 2007.

Buying Qumranet thus gives Red Hat more control over its destiny in virtualization. In a statement, Red Hat claims that it "can now deliver what virtualization-only vendors cannot: a comprehensive solution integrated with the operating system, which can drive down IT costs while simultaneously enhancing the flexibility and responsiveness of IT infrastructure."

The Qumranet acquisition also adds the company's virtual desktop interface (VDI) capability to Red Hat's toolbox, which allows a systems administrator to spin up a virtual desktop for a user and then manage it remotely for easier system upkeep.

"We think they have the best VDI on the market now," Cormier said. "We'll accelerate that with our customer base."

The Qumranet acquisition also extends Red Hat's virtualization solutions for managing Windows desktops. SolidICE is a high-performance, scalable desktop virtualization solution built specifically for virtual desktops, not simply a retrofit from server virtualization solutions. SolidICE is designed to enable a user's Windows or Linux desktop to run in a virtual machine that is hosted on a central server.

''Red Hat customers enjoy highly responsive, flexible and cost-effective IT infrastructures,'' Jim Whitehurst, Red Hat's CEO, said in a statement. ''This acquisition furthers our capability to widen the gap between open source and proprietary infrastructure software.''

The Qumranet acquisition should cut Red Hat's earnings per share in 2009 by 5 cents to 6 cents in the fiscal year that ends in February 2009, the company says. In fiscal 2010, Red Hat expects Qumranet to add as much as $20 million in revenue.