Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Thomas A Watson who wrote (1482)	8/8/2000 3:06:11 PM
From: Knight	Respond to of 1794

Re: New batch of CEOs climbs into open-source saddle Quotation from article: "There's an opportunity to be successful on a Grateful Dead model," he said. "The Dead made money and let people record their music." MandrakeSoft sells training, professional services and support, Poole said. There's a big problem with Poole's analogy here. Namely, there is only one instance of the Grateful Dead. They can't be cloned. The problem with Linux as a money-making business is that because it's "open source," it can be copied. The question your raised ("where's the intellectual property?") is the right question.

To: Thomas A Watson who wrote (1482)	8/8/2000 3:09:43 PM
From: Knight	Read Replies (2) \| Respond to of 1794

WIND vs Linux in embedded space Would appreciate comments on the following. (Disclosure: Right now I'm long WIND and have no investments in any of the Linux companies. If I'm off-base on this, or if anyone thinks I should hedge my bets, I would love to be educated.) My reservations about an investment in RHAT (or any of the other Linux companies)are: 1) Where's intellectual property? (the question Tom raised) 2) What are the barriers to entry? 3) Business model (services vs. royalty) The problem with services as the only revenue stream is that it is labor-intensive (i.e. high variable costs). A royalty-based business model is much more attractive because it offers higher margins, low (almost non-existent) variable costs, and the ability to grow exponentially to meet demands when/if network effects send the industry into hyper-growth. Because of the above, I've been an investor in Wind River Systems for about a year and a half. I think WIND's prospects for huge profits are much better than RHAT (or any of the Linux players). This is not to say that Linux can't be a profitable business and won't be successful. Certainly, Linux already is successful. Also, it's quite possible that Linux could pose a formidable challenge to WIND (and others)in some/many segments of the embedded OS space. However, because of the factors I mentioned above, I believe WIND stands to profit much more from a victory in the embedded OS wars than RHAT (or any of the other Linux vendors).