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Technology Stocks : Red Hat Software Inc. (Nasdq-RHAT)

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To: Dragonfly who wrote (1049)	9/8/1999 4:21:00 PM
From: Eric Wells	Read Replies (2) of 1794

Dragonfly - thanks for your message. I believe you and I have different views on product development. My experience has resulted in my belief that effective development, revision and ongoing support of a software product is more efficiently accomplished through a dedicated team with a leader, rather than through a distributed set of contributors. You can point so some Open Source successes - I can point to many "closed source" successes. While working on NT may have been difficult (and everything I have read about the initial NT development effort indicates that it was) - I don't you can deny that NT has been a success (of which you deserve some of the credit). I will concede that greater modularization of operating systems may lend support to Open Source development efforts. However, I still feel there are risks that companies like Red Hat will face in relying on module development by others - especially if those modules are critical pieces of the product. I believe that many Open Source advocates are overlooking or downplaying these risks. Not that Red Hat cannot build a viable business on this model - I just don't think the company can build the type of "revolutionary" business that would justify current investor infatuation. As for the "100,000 Linux developers" figure I threw out in my last post - I pulled this out of the air, and would not attribute any accuracy to it. I have no idea what the number is. Whatever the number, I think that a better model will have to be developed to compensate these developers for their contributions to Linux. I'm sure there must be some developers out there that have contributed to Linux that are feeling a bit "left out" in that they don't have any Red Hat shares and cannot participate in the current investor mania over the stock. I have no data to dispute the information you provide on Linux testing. All I can say is that someone must be paying for all this work - and as such, there must be revenue flowing to these different sources that work on Linux production - otherwise, I would guess that the model will not hold up for long. I don't think Linux is doomed - I think it will hold it's current market share and perhaps capture more. However, I think it will have a very difficult time taking any significant market share away from NT. There are a lot of software developers that hate Microsoft - but there are many more software developers that love Microsoft. And there are many IT managers and CIOs that love Microsoft as well. Look at the operating system purchase decision from the viewpoint of the CIO - the CIO will want to purchase a product that is stable, and comes from an established company that will take responsibility when things go wrong. You can argue that Linux is stable - and that Red Hat is established - but what counts is how the CIO views things. An operating system cannot succeed on technical merits alone. And keep in mind that Microsoft has some $20 billion in cash - which can be used to launch marketing initiatives. And I'm sure I don't need to tell you that Bill Gates views NT as Microsoft's most strategic product. Bill's not going to let market share go without a fight. Again - thanks for your message. -Eric Wells

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