John, PMSW:
Agreed, the valuations do appear to be madness. To be fair, it wasn't any of the boys from Carolina who priced RHAT stock at these levels, it's rabid speculators. I thought RHAT's distribution of pre-IPO shares to the development community admirable. In my book this gutsy "rebel alliance" deserves respect for showing the kind of gumption that built companies such as MSFT in the first place.
The RHAT IPO price was, considering the low chance of a big upside, arguably fair. In fact you'll note that Wall Street continues to price these things far lower than what they trade at day one. My former classmates may be greedy but they're not stupid. This way when the collapse comes their, um, bums, are covered.
Don't be so quick to dismiss Linux, or freeware generally. I'll bet they're taking it seriously in Redmond (and in Mountain View). Can you identify one of the ".com" household names that runs on the MSFT stack? Amazon is running "big iron" commercial Unixes for both front and back ends. Yahoo runs FreeBSD (another Unix freeware variant). I believe both are running the free Apache web server (part of the RHAT bundle as Lars points out).
Linux's biggest weakness is JJ's infamous "application barrier to entry" that in my opinion will limit its uptake as a client, internet appliances nonwithstanding. Ah, but as a server OS! Ever checked the prices on Sun hardware? If Intel boxes become credible alternatives, watch out! Intel will make money, but customers will now have a choice of OS.
You're correct that a potential weakness of Linux as a server OS choice is, who do you turn to when things don't work? Reputable suppliers like Sun are there to stand behind their products. You'd be crazy to bet your business on unsupported technology, no matter the low cost. In my view this is the other part of RHAT's value proposition.
Others could enter the market and provide the same service, so RHAT's going to have trouble creating a sustainable competitive advantage here. They do, however, have the first mover advantage, and a big one it is. If they can get the reputation as the "obvious" (read: "safe") choice, then it's off to the races. |
