Why The Markets Still Don't Trust Linux

IT Manager's Journal (OSDN) ^ | Friday May 07, 2004 | Justin Kuepper

[Golden Eagle]

Now before you Linux advocates go screaming bloody murder, you might notice the parent website of the article is OSDN, an open source group who also host Linux.com.

The author makes some very good points, but also leaves out other significant reasons US investors are leary of Linux, such as the anti-capitalistic goals of the Free Software Foundation, who wrote the Linux license and publicly proclaim on their website their "ultimate goal" is the "end of proprietary software". Their leader Richard Stallman is a flaming anti-American, who on his own personal website www.stallman.org actively cheers on the Iraqi's in the on-going war in Iraq, something most Americans aren't too hip about once they found out. Even the worldwide Linux "community" is of questionable moral standing, cheerleading the mydoom virus attacks against US software company SCO (who are claiming in US Federal Court Linux is an illegal duplicate of Unix) and possibly even being behind the creation of the virus itself.

Bottom line, there's a suspicious dark cloud over Linux, and not 1 single bright success story despite years and years of hype.

[Golden Eagle]

Have at it.

[ColoradoSlim]

Could it be peoples latent and deep seated fear and total abhorrence of penguins?

[taxcontrol]

Interesting in it's absence from this article is the support that IBM and HP have been providing to Linux.

[Golden Eagle]

Could it be peoples latent and deep seated fear and total abhorrence of penguins?

You know, I really don't think so. IMO the pengiun seems to help Linux acceptance, and distract from the actual issues. I've even heard that during Linux deployments some system admins even give out soft cudly suffed-animal versions to help users going through the shock of losing their beloved Windows software and related applications. Wouldn't work with me, though, I don't really care for stuffed animals myself.

[eno_]

If Red Hat has a P/E ratio (which is hard to critique without a revenue number and market cap number) 3X of Yahoo, I'd say that "market" has an irrationally large amount of confidence in Linux.

[chilepepper]

One of the main reasons the Markets still don't trust Linux is because Microsoft spends a great deal of money convincing them not to (vis their funding of SCO in order to sow Fear, Uncertainty and Doubt -- FUD for short).

Microsoft's problem is that the folks who gave them their start in the business, e.g.- IBM, who also happen to be the company that INVENTED FUD as a marketing ploy, has turned against them. IBM is the Linux champion and white knight.

In a matchup between IBM and Microsoft, do you seriously believe that Microsoft will win that battle?

Linux Rules!

[Golden Eagle]

In a matchup between IBM and Microsoft, do you seriously believe that Microsoft will win that battle?

LOL, still relying on OS/2 to run your business I see.

[blackfarm]

I'm using Linux right now. Linspire is a awesome company that has an awesome product.

http://www.linspire.com/

[Michael Barnes]

There's other solid offerings out there..

[isthisnickcool]

Is Linux finally becoming a viable alternative to proprietary operating systems, or is this rise simply a byproduct of a mini-tech bubble?

This is a dumb question. The answer to ths dumb question has been "yes" for several years.

[Doug Loss]

Bottom line, there's a suspicious dark cloud over Linux, and not 1 single bright success story despite years and years of hype.

You clearly haven't been reading the multitudes of bright success stories all over the tech press. One thing to note here is that the markets "trust" anything they perceive as being able to generate a reliable profit. They don't "trust" Linux because they don't see how it can do that. What you misunderstand (don't feel bad; lots of people do) is that Linux and Open Source software in general have the effect of shrinking the market in the areas where they are increasingly accepted. Therefore, the markets aren't fond of them. After all, if someone is giving away something as good as or better than what you're selling, where is the incentive for anyone to buy from you? I think a better measure of Linux and Open Source software's acceptance will be the success of the companies that are moving to it whole-heartedly (IBM and Novell come to mind immediately).

[Bush2000]

In order to inspire investors, you need to have some kind of advantage that your competitors don't have. For example, a proprietary formula (i.e. Coca-Cola), information (i.e. Google), or product (i.e. Porsche, BMW, etc). Linux companies simply don't have much differentiation between them. That's why Red Hat and many other Linux vendors have turned hard-right, away from Stallman to embrace Enterprise service level agreements. Free Linux is worth zero. Over time, it is the commercialization (and, hence proprietization) of Linux that will increasingly lend confidence to investors. Red Hat and IBM are arguably in the best position to leverage this wave. What these companies really offer are high-dollar services atop Linux. Only continued investment in proprietizing their offerings will build market confidence.

[Sam the Sham]

Could it be said that the key reason for IBM support of Linux is that it will serve as a big iron operating system ? There are applications for which big iron and only big iron will do and it is impossible to persuade anyone under the age of 30 to learn COBOL, MVS, JCL, etc ?

[Golden Eagle]

There's no shining star for Linux right now. Novell's move is considered by many to be one of desperation, since their other products were withering on the vine a la Banyan. IBM has lost battles to market leader Microsoft as well, and they are now joining forces and appealing to a worldwide audience with Linux. They've won a few battles, like the city of Munich Germany, but total $ income from worldwide sales of operating system software is still dominated by Windows and Unix.

IBM sells those products too, en masse, so they are well diversified, whereas Novell and Red Hat aren't. Those two companies are here to stay, but their ability to grow into powerhouses is crippled due to the fragmentation of Linux whereby they are competing for the same customers who together still only represent a minority of the market. I expect Linux to continue to creep into the overall *nix market share, but ultimately only further fragmenting it and limiting growth.

[Golden Eagle]

Linux companies simply don't have much differentiation between them. That's why Red Hat and many other Linux vendors have turned hard-right, away from Stallman to embrace Enterprise service level agreements. Free Linux is worth zero. Over time, it is the commercialization (and, hence proprietization) of Linux that will increasingly lend confidence to investors.

Spot on, there's not much differetiation because they have to give many improvements they make to their own version of Linux back to "the community", thereby immediately allowing their competitors to implement those features into seperate competing versions. This only further fragments the market, something discouraging to investors as they realize it is too much competition for the amount of demand which will keep prices at extremely low levels.

As you infer there will be increased "commercialization" of Linux, including attempts to legitimize it's legal standing via cross-patent agreements between companies like Sun, Microsoft and Novell. Once this "rite of passage" has been granted, and the leading commercial versions of Linux began to implement more proprietary components atop their distros, we'll see those versions, not necessarily all versions, become better targets for investment. Still a ways off, IMO. There's going to be a civil war within "the community" first.

[Penner]

Right now, Yahoo! trades at a premium of about 146 times earnings, which is somewhat standard for Internet companies.

They won't trust Linux, but they'll trust this extremely overvalued company, LOL.

Penguins rule!

[Cicero]

Makes sense to me. For a large corporation to invest in Linux means training its IT staff to deal with it but, more important, training all its workers to use it. Most people have some experience with Windows computers. Few have experience with Linux.

So it would take a very substantial amount of time and money to go over to Linux. It would make no sense unless you knew that Linux will continue to be developed at a rate similar to Apple and Microsoft and the concurrent development of memory chips and hardware. What if you went through this huge conversion effort and, a few years later, Linux started to die on the vine?

The history of open-source software has not been great. Look at Java. It started out brilliantly, but the beta development was very ragged and improvements came more and more slowly. And look at the poor relations between Sun and the open software community. You have to have someone in charge, such as Sun or Red Hat, but that begins to offend the open source folks and they may decide to go off en masse and do something more interesting.

Microsoft, on the other hand, has a track record. It will be here the day after tomorrow.

[Golden Eagle]

They won't trust Linux, but they'll trust this extremely overvalued company.

I guess we all have our opinions. Yahoo is the best application on the internet, as has been for years, as far as I'm concerned. I use it as my startup page, as a matter of fact.

[ChadGore]

blah wubba tadda blah wubba blah . . , but it's free !