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Technology Stocks : Red Hat Software Inc. (Nasdq-RHAT) -- Ignore unavailable to you. Want to Upgrade?

To: Mitch Blevins who wrote (1136)	9/9/1999 10:37:00 PM
From: Eric Wells	Read Replies (3) \| Respond to of 1794

>>RedHat does not make money by selling software. Mitch - thanks again for your message. My comments were directed primarily at the Linux Open Source community, and not at all Open Source projects as a whole. So let's focus for a minute just on Linux Open Source efforts. There are many developers around the world that have and continue to contribute to Linux. Although I am not familiar with these developers, I would assume that some of these developers have made some money off their contributions, while others have perhaps made little money, or no money at all (obviously those developers that were successful in participating in the Red Hat IPO via E-Trade made more money that those that were not able to participate). Now, let's look at Red Hat. Red Hat insiders, that is, those individuals that hold most of the stock, have made a tremendous amount of money (at least, on paper) even though Red Hat, the company, has made no money (Red Hat is $2 million in the red). I would argue that there are some Linux developers in the world that are watching what is happening with Red Hat and are contemplating the tremendous amount of money that Red Hat insiders are making - and these developers are trying to conjure up ways that they may be able capitalize on current market conditions as well - so that they can, perhaps, make a lot of money like Red Hat insiders have. How can others that are participating in Linux development emulate Red Hat and make a lot of money? One way is to do exactly what Red Hat is doing - that is start a company that has a business model by which revenue is realized through offering Linux support and service. The one risk here is that the market may soon be flooded with such companies, reducing the likelihood of any one company being able to garner the same gains that Red Hat has through its IPO. Additionally, the greater competition will reduce the amount of overall revenue that any one company will be able to get (assuming one company does not dominate). Another way to make money off Linux would to be offer some version of Linux with specialized functionality that no one else is offering. This could be done if a group of Linux developers creates a version of Linux and keeps it proprietary - that is they don't share their code with anyone else. It is through keeping technology proprietary that a business can hope to maximize a revenue stream. You may say that the Open Source community would frown upon this - that such an action would violate the free and open nature of code sharing that is fostered by the community. But this won't keep it from happening. Money is a very strong motivator - it causes people to do incredible things. And it most certainly could cause some within the Linux Open Source community to endure the scorn of their colleagues in developing and not sharing a proprietary piece of Linux. So, this is my point. Adding money to the Linux Open Source equation - and not just small amounts of money, but very large amounts of money (like the $1 billion plus that the Red Hat CEO is now worth) - puts Linux Open Source efforts at risk of fragmentation. It could potentially disrupt the community to a point where code sharing and joint development efforts do not occur as smoothly as they have in the past. You could argue with me all night on this point - and you could build your case to say that the Linux Open Source community is different and that participants are not motivated by money - and that no matter how many more Linux companies have multi-billion dollar IPOs, you will still have dedicated Linux developers around the globe willing to contribute, some for little or no compensation. But I have human nature and history on my side of the argument. I'm not saying people are evil - I'm just saying that people are highly motivated by money. And keep in mind - I'm not saying that Linux Open Source efforts definitely will become fragmented - I'm saying there is a risk that it will happen. I would argue it would be a big plus for the Linux Open Source community for Red Hat's stock price to go down to 20, and for other Linux oriented companies that have not yet gone public to experience only moderate stock price increases when they do go public. This will help to establish and maintain a feeling of equality - so that those Linux developers that don't own stock do not feel like they are being left out. Believe me, the feeling that others are making tremendous wealth at your expense is a very de-motivating factor. And I can't help but feel that there are Linux developers out there at this moment that have this feeling. Thanks, -Eric Wells

To: Mitch Blevins who wrote (1136)	9/10/1999 1:26:00 AM
From: Gerald Walls	Read Replies (2) \| Respond to of 1794

Oh, come on! I've seen you post several times here that the love-fest with Red Hat continues. I don't think so. There was plenty of hatred being spewed at Red Hat when it announced the IPO. One moron even got printed in several articles saying, basically, that Red Hat was the "evil Microsoft" of Linux because they cared about Money instead of "The People". Although clearly a moron, his opinion counts because he was a Linux developer. I wonder if he still is, since he has no control over the "evil" Red Hat profiting from his efforts. Why do you think they tried to "reward" Linux developers with shares in the IPO? Altruism? Gratitude? Ha!