Originally Published: Thursday, 27 April 2000 Author: Ronny Ko
Published to: columnists/Ronny Ko Page: 1/1 - [Printable]

The Future of Linux: The MS Twist

Breaking up Microsoft would be a good thing for consumer. But it may never happen; the company has vowed to appeal the April 3 ruling. With all this rambling over the future of Microsoft, where does this leave Linux?

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Ever since Judge Penfield Jackson issued his findings of facts and declared Microsoft a monopoly, the US Justice Department and the attorney generals of 19 states have been looking for remedies. The remedies being considered include breaking up the company into three businesses: Microsoft Network, Office productivity and operating systems.

The operating system business would involve starting a second company whose sole job is to distribute and license the Windows operating system to third parties, or just starting two competing companies which have full access to the operating system software. If the latter were the case, this would have a positive effect for consumers because Microsoft's new CEO, Steve Ballmer, admitted to Washington Post that the marginal cost of producing the software is very low compared to the sale price.

Breaking up Microsoft would be a good thing for consumer. But it may never happen; the company has vowed to appeal the April 3 ruling. With all this rambling over the future of Microsoft, where does this leave Linux?

Linux is a great operating system. It's extremely stable and well-received in the business enterprise community. Unfortunately, Linux has yet to make a dent on the consumer and desktop market. This is shown well in the stock price of VA Linux Systems [NASDAQ: LNUX], Andover.Net [NASDAQ:ANDN], Caldera Systems [NASDAQ: CALD] and, to a lesser extent, Red Hat Software [NASDAQ: RHAT] -- some whose stock prices are today trading below their IPO pricing.

Windows Distributions?

Seeing the success of Linux distributions, a possible remedy is to allow the creation of "Windows distributions." The consideration of two companies having access to the source code seems to suggest it.

Linus Torvalds has been very successful at making sure that each Linux distribution does not have incompatibilities. But, will the new licensing company have the same influence that Linus has with the community?

What about Corel?

If the above scenario were to come true, Corel [NASDAQ:CORL] has bet its farm on Linux. The company recently announced that they are running low on cash and announced that they need approval from its shareholders and SEC to access its proposed merger with Inprise Corporation. Inprise currently has over $200 million in cash.

"If the proposed merger does not occur, other sources of financing are not secured and/or Corel's operating results do not improve, a cash deficiency may occur within the next three months," the company stated in the filing. As a result, many investors have been divesting from Corel, helping to drive Corel stock down 16.54% to close at $6.63.

Despite the fact that many Linux stocks are did not continue heading south, the future of Linux is under question. The relative weakness in the marketing and distribution channels of Linux, and the apparent confusion that many consumers have over the many different distributions thanks to the lack of a single "maker" of Linux, is helping to drive down the market penetration of Linux into the consumer and desktop markets.

Ronny Ko is the Editor-in-chief of 32BitsOnline Magazine, a multi-platform magazine founded on the idea that "There's more than one way to Compute."





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