For instance, Red Hat unveiled its Directory Server software, bought from America Online Inc.'s Netscape division, at its first annual user conference last June. The global market for directory service software was worth $669 million in 2005, and is expected to almost double to $1.3 billion by 2009, according to Sara Radicati, principal analyst at the Palo Alto, Calif.-based Radicati Group.

The market remains dominated by Microsoft Corp.'s ActiveDirectory, followed by Novell's eDirectory software. As for Red Hat's market share, "It's very small, let's put it that way," Radicati said. She pointed to the reluctance of companies to make big switches such as swapping directory servers.

Before buying JBoss, Red Hat had its own Java-based application server, based on the open-source Jonas application server developed by the European ObjectWeb consortium. It competes mostly with IBM Corp.'s free WebSphere Application Server Community Edition, formerly known as Gluecode, as well as the open-source Apache Group's Geronimo application server, said analysts.

Although Red Hat CEO Matthew Szulik said the company plans to continue its "significant" investment in Jonas analysts did not share that optimism.

With JBoss, Red Hat gets to start with a product that is already popular. Rachel Chalmers, an analyst with The 451 Group, estimated that the J2EE cross-platform application server helped propel JBoss to $50 million in revenue last year, mostly in service and support fees.