LinuxPlanet: Editor's Note: Linux in 2001Jan 22, 2001, 21:11 (7 Talkback[s])
(Other stories by Kevin Reichard)
"Let's face it: if the end of 1999 was the peak for Linux pure plays, the end of 2000 was the zenith. Both VA Linux and Red Hat Software -- arguably the leading Linux pure plays to reach the stock market -- were chugging on all cylinders at the end of 1999, only to see their stock prices continually fall through the end of 2000. A score of other companies, including TurboLinux, Linuxcare, and Lineo, abandoned plans to go public in face of a skeptical stock market."
"More ominously, there seems to be little on the horizon that would lead these stock upwards -- at least according to many analysts that cover the Linux stock sector. Anyone familiar with the Linux world knows that one of the eternal debates is how companies will make money selling something that's given away for free. Yes, it can be done, but value needs to be added. (Water is the most plentiful substance on the planet, and somehow or another Evian convinces folks to pay extra for its mineral water.) Red Hat Software and VA Linux are both attempting to add this value by focusing on the enterprise, but enterprise sales are really difficult for newcomers."
"However, for those companies who are already established in the enterprise, Linux is a way to add some value at a time when margins are tightening and budgets are decreasing. IBM, Dell, Compaq, and Hewlett-Packard have all embraced Linux as an enabling technology for their clients. By enabling technology, I mean that Linux is a base technology that makes other things possible, such as scalable Web serving or clustering. Want to get new life from that old mainframe? Install Linux as an OS and create 2,000 Linux machines on one box. Want a clustering technology? Then pony up for a Linux cluster. In these cases -- and many more -- sales are made because of a specifically technology feature that Linux can deliver at a more cost-effective basis. Let's face it: It's cheaper for an IBM to push Linux than to maintain a large staff of AIX coders. But IBM's customers are not using Linux because it's a magic technology, and what many Linux-oriented firms need to realize is that Linux's strength and marketability lies in this enabling capability."