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|Originally Published: Friday, 11 February 2000||Author: Ronny Ko|
|Published to: columnists/Ronny Ko||Page: 1/1 - [Std View]|
Consolidation Before the Tsunami Strikes
Each time I attended LinuxWorld Conference & Expo, I notice the ever-larger number of attendees. LinuxWorld in New York City was no exception. The ever-increasing size of the crowds is a sign that Linux is attracting a great deal of attention not only from developers and enthusiasts but also from big business....
At these conferences, business relationships are struck. Big transactions and products are announced. And this conference was no different. The biggest announcement made to date is the acquisition by VA Linux Systems of Andover.net. Both companies went public days apart from each other in December 1999. While both companies have lost more than 50% of their value since their respective IPOs, many analysts view VA Linux as the stronger company. Many Andover investors have been left biting the dust by buying Andover stock at $90. Unless VA stock goes up dramatically, it will be a while.
However, it seems that investor hunger for Linux stocks have died down a little. One week after, Corel Corp. and Borland/Inprise announced that they will be merging and forming a new company under the Corel banner. Corel and Borland's CEOs were strong to note that it was a "merger of equals." Ownership of the new Corel will be made up by 56% Corel and 44% Borland/Inprise.
The announcement did little to boost the stocks of both companies. Borland continues to trade at around $13USD while Corel hardly moved and continues to float around $26. When asked why Corel stock hardly moved, market watcher Linda Meyers said, "what do you get when you put two crappy companies together? You get crap."
Is Linda's views towards Corel a general sign of things to come for Corel or is it a generally held view in amongst many investors that the Linux bubble has burst?
Today, there are two philosophies about where Linux should be. Companies such as Red Hat believe that Linux's future is in the server-enterprise markets. On the other hand, Corel and Borland believe that to reach the critical mass needed, Linux needs to become as ubiquitous as Windows is today. What is salmon fish to do? Imagine Corel, with its Windows beginnings, trying to swim back. On its way, Corel is fighting a large downstream river. As it swims upstream, its body gets stressed and beaten. But at the end of its journey, it has a chance to spawn many more offsprings [Linux on the desktop]. Red Hat on the other hand, being that it didn't come from the same stream, it doesn't have to fight the large currents but the river is also smaller too.
It will be a while before we really know which of the two philosophies will win out but so far, I personally see Corel getting more market and revenues in the long term. Reinventing itself as a Linux company might just have been the best move Corel has ever done.