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  • October 2005 (Revised February 2007)
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Red Flag Software Co.

By: Felix Oberholzer-Gee, Tarun Khanna, David Lane and Elizabeth Raabe
  • Format:Print
  • | Pages:16
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Abstract

In 2005, just five years after its formal launch, Beijing-based Red Flag Software was the world's second-largest distributor of the Linux operating system and was expecting its first annual profit. On a unit basis, Red Flag led the world in desktops (PCs) shipped with Linux and was No. 4 in installed servers. On a revenue basis, Red Flag was fourth overall. Within China, Red Flag held just over half of the Linux market and ran key applications for the postal system, large state-owned enterprises, and more than a million PCs. The Chinese government supported Linux as an alternative to Microsoft's Windows operating system to avoid royalty payments to foreign firms and dependence on foreign technology. Even so, Red Flag President Chris Zhao felt the same pressure many start-ups faced: How could Red Flag compete against a giant like Microsoft? And what competitive advantages could Zhao bring to bear against an experienced Linux veteran like Red Hat, a U.S.-based software company that had just announced its plan to invest to capture market share in China? Zhao worried that government support would evaporate if Red Flag performed poorly.

Keywords

Digital Platforms; Competitive Advantage; Applications and Software; Business Startups; Globalized Markets and Industries; Information Technology Industry; Distribution Industry; Beijing; United States

Citation

Oberholzer-Gee, Felix, Tarun Khanna, David Lane, and Elizabeth Raabe. "Red Flag Software Co." Harvard Business School Case 706-428, October 2005. (Revised February 2007.)
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About The Authors

Felix Oberholzer-Gee

Strategy
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Tarun Khanna

Strategy
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More from the Authors
  • Firm-Induced Migration Paths and Strategic Human-Capital Outcomes By: Prithwiraj (Raj) Choudhury, Tarun Khanna and Victoria Sevcenko
  • Your Company Needs a Space Strategy. Now. By: Matthew Weinzierl, Prithwiraj (Raj) Choudhury, Tarun Khanna, Alan MacCormack and Brendan Rosseau
  • AES Corp: A Global Power Transformation By: Tarun Khanna, Allison Ciechanover and Matt Higgins
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