Originally Published: Sunday, 28 November 1999 Author: Jerry Hatchett
Published to: featured_articles/Featured Articles Page: 1/1 - [Printable]

The Business of Linux

The business of Linux can best be described with one word: BOOM! It's no normal boom, mind you. It's a thundering boom, the kind that's shaking windows from Wall Street to Redmond. Investors across the land are embracing the big Linux plays with a fervor and the trend shows no lasting signs of reversal or weakness. Red Hat got the big train out of the station, and Cobalt Networks was not far behind. Why all the fuss? That's an easy answer. Investors love to bet on the future, and they see Linux as a big part of the future financial landscape....

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The business of Linux can best be described with one word: BOOM! It's no normal boom, mind you. It's a thundering boom, the kind that's shaking windows from Wall Street to Redmond. Investors across the land are embracing the big Linux plays with a fervor and the trend shows no lasting signs of reversal or weakness. Red Hat got the big train out of the station, and Cobalt Networks was not far behind. Why all the fuss? That's an easy answer. Investors love to bet on the future, and they see Linux as a big part of the future financial landscape.

To be clear, there are many in the investment community who are shocked and even appalled at the valuations of Linux-related stocks. They point out unproven track records and minuscule sales as compared to other stocks with prices like these. They moan and groan and warn that it can't last. They use scary sounding terms like "speculative bubble," implying that the tiniest prick will burst the shell into a jillion pieces and end the ride for those on board. They also get cricks in their necks as they stand on the sidelines and watch the stocks soar ever higher into the stratosphere. Then the market closes for the day, and they go home and whine some more about how impossible the whole situation is, despite the fact that they just witnessed not only the possibility but the hardcore reality.

Those inside the "bubble" have an entirely different perspective. They don't look backward and downward to try to find similar genres from the past to compare Linux-related issues to. They don't because they know it would be a waste of time. They understand that there is nothing else like the Open Source Movement, either now or in the financial past. No parallels exist for a movement that began as the offering of a totally free product and then swelled explosively into the effort that now exists. For that matter, it's hard to envision any brick-and-mortar effort that could be construed as comparable. The personal computer and the Internet have shifted us into a different era, and it's my humble opinion that nothing exemplifies the new paradigm as well as Linux. It's the ultimate testament of what can be accomplished through e-collaboration and dogged determination in the face of adversity.

So, how does Linux figure into the financial equation of the future? Gee, I'm glad you asked! Let me share tidbits of my own personal vision with you. First, I see an evolving desktop based on an OS that runs and runs and runs without crashing. I've discussed this part of the vision before, and will not re-visit the issue at length. :-) I see outright dominance in the server market. But these are only a part of the big image. Beyond what we typically think of as computer products, I can picture so many exciting products with a heart of Linux that I almost get giddy thinking about it. (Some of them are already taking shape out there right now, like Internet Appliances.) I think that within the next few years we'll see Linux running inside everything from PDAs to cellular phones to hybrids of the two. Set-top Linux boxes that really marry the television to the Internet. Smarter cars. Better consumer electronics. Development of so many things will so much easier when the shackles of overpricing and inferior quality are removed. Creators of nifty gadgets will be free to tailor the code to the needs of the gadget, instead of tailoring the gadget to the limits, budgets, and constraints of the code. With all these development needs will quite naturally come lots of jobs for Linux-savvy personnel, fueling the Linux economy and driving it forward. That, my friends, is the nutshell version of my vision.

While my Linux optimism is obviously shared by many in the world of investors, I of course do not contend that the reasoning behind the optimism is universal. Some do have knowledge of and zeal for Linux. Some of the stock performance is being driven by pure trading speculation and the never-ending search for a quick buck. But I believe that the vast majority of the high-flying status is directly attributable to the fact that investors are generally ahead of the curve when it comes to financially futuristic thinking. They pay close attention to voids within the marketplace and partake aggressively when they see a product or service that can fill a void. Such a void definitely exists within our favorite tech sector, and Linux has all the pieces ready to drop in place and fill the needs. And therein lies the real driving force behind the market momentum of Linux.

The optimism I've talked about is summed up nicely in the subject line of a discussion thread I found on Silicon Investor: Linux Stocks. Find them now, retire early.

They could be right.

Jerry Hatchett, hatchett@futuresouth.com.





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