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Technology Stocks : EBIZ-CPU Micromart -- Ignore unavailable to you. Want to Upgrade?

To: dog76 who wrote (41)	7/12/1999 10:08:00 PM
From: Ben Franklin	Read Replies (1) \| Respond to of 48

Important for Linux followers...And great argument for owning EBIZ (closed today @ $8 +23%) This is an excerpt of an essay written by Bill Gurley, venture capitalist at Benchmark Capital – one of the nations preeminent venture firms (they financed Ebay, Eloan, Ariba Technologies etc.) – he is one of the most respected Internet gurus in Venture Capital today. It is in regards to the “open source” movement and he has some compelling arguments for the commercial success of Linux. If the thoughts in this essay pan out, then Linux can be a viable threat to Microsoft. Companies such as EBIZ may be hidden gems. Take a closer look: ABOVE THE CROWD By Bill Gurley The Rising Impact of Open Source “Perhaps the most powerful movement in the software industry today is the continuing rise of "open-source" development--producing such successful applications such as the Linux OS... Open-source development can produce business-quality code... The leading open-source operating system, Linux, is also gaining steam. According to Red Hat Software, there were 12 million Linux users at the end of 1998. Perhaps more importantly, IDC believes that Linux is now running on 17% of all servers, most impressive as the server market is considered more technically complex than the desktop market. Open- source allegiants believe that distributed testing actually leads to more reliable code than could ever be achieved within a single organization. Search the Internet for articles on Linux, and you will find many users that believe that open-source code is in fact "more reliable" than Microsoft's Windows NT. And while Microsoft will vehemently disagree with this view, the fact that the argument exists at all is a testament to the obvious legitimacy of open-source code. Open-source business models are emerging. Believe it or not, it turns out that you can make money of freely available software code. Perhaps the best example of this is Red Hat Software, a company that packages, distributes, supports, and more importantly brands a version of the Linux OS. As with any software product, users value consistency and trust, and Red Hat has done a wonderful job of packaging and distributing the Linux OS. Sure, you can download the code for free, but for many users, $50 is a reasonable fee for code that is easy to install, comes complete with documentation, and comes with the support guarantee of Red Hat. As a testament to the importance of Linux, Compaq, Oracle, Novell, and Dell all recently invested in Red Hat, and each company entered into an agreement to either distribute or build upon the Red Hat OS. Open source is a tough competitor. Competing with open source is a bit like fighting the invisible swordsman...the software is available for free, which eliminates price as a competitive weapon. The pricing tricks used by Microsoft to attack Netscape are less effective against an already free solution. And while Microsoft has now begun to attack Linux as well as the legitimacy of the open-source model, they have painted themselves in a contradictory corner by holding up the success of Linux as a competitive threat to be considered by the DOJ..." J. William Gurley 1999. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. Any opinions expressed herein are subject to change without notice. The author is a general partner of Benchmark Capital (www.benchmark.com), a Venture Capital firm in Menlo Park, California. Benchmark Capital and its affiliated companies and/or individuals may, from time to time, have positions in the securities discussed herein. In particular, Benchmark Capital is an investor in Red Hat Software. ABOVE THE CROWD is a service mark of J. William Gurley.