Update on the 9-4-00 opinion

Didn't take long for my insight to materialise...that a coporate gorilla would buy Corel - about one month! Didn't expect it to be Microsoft. I guess MS saw the same thing coming..."Sun buys Corel and renders it to the open source movement." Microsoft nipped that possibility in the bud yesterday. Doesn't much matter because both Microsoft and Corel are in the same boat now. As Microsoft continues to make these types of moves, in a desparate attempt to hold on to its monopoly, Microsoft's bottom line will continue to deteriorate. MSFT's stock hit a two year low today.

Linux is happening and in a very big way. The most powerful company in the world is fighting a losing battle. I'm installing a small business web front end at the company I work at. It is Linux...Apache, DNS, Qmail and FTP server/router type of firewall wonder machine. Kinda of a Microsoft / ISP nightmare come true thing. What company wouldn't want to do the same if they knew how easy it is to do with Linux? The transition is in process. I also noted that Red Hat has bundled Star Office in Release 7. The revolution is here and we are proud to be part of it.


Current Opinion

If Star Office becomes a reasonable alternative to MS Windows, then Microsoft will go down the same path as Novell. The influence that huge corporations have on the software industry is shown in the historical and rapid progression of Java. Corporations will use Linux and Linux Office Apps in place of Microsoft products. Schools and Colleges around the world are naturally migrating to Linux. The need for Open Source software is directly proportional to the cost of Microsoft Software.

The PC hardware and software industries have reached a very interesting point. The office software available is mature and the benefits to upgrading are decreasing. The hardware available now exceeds the demands of the office software and the benefits to upgrading are decreasing there as well. Within the last year, PC manufacutrer's stock prices have declined and Microsoft's stock price has been cut in half. As the profitability of Microsoft's software declines and the power of PC's increase, Star office applications will become a more realistic alternative to Windows Office 2000. Within a year outdated PC's (pentium III 450's by then) will handle the Star office applications. Additionally, more powerful computers will be donated to schools and allow the Linux distributions to operate at peak performance levels.

Corel already has a top Office Suite available at a fraction of the cost of Microsoft's office product. But, Word Perfect Office 2000 may end up as open source. A single big corporation could easily make that happen. The reason a corporate gorilla may do just that already exists. Since these variables will reveal their values over time, I'm going to change my opinion about Red Hat and VA Linux. I now feel the market trend toward Linux is so strong that both Red Hat and VA Linux are in a position to take advantage of the trend's most lucrative aspects. The fertile horizon for Linux is as wide as the imagnation of those who build it.

The need for Linux is expressed no less than in the Government's requirements for the underprivelaged to have computer access at school. The need is there. The hardware is there. But, the money for Microsoft software is not there. Linux is, and will continue to rapidly bridge the gap. Although Corel may have the office solution at this time, it means little. A small company with the right solution standing in front of the floodgates of a technological revolution may not survive the currents of change. Change brings uncertainty and chaos. When the waters subside the strongest will have already put the pieces of Microsoft's fallen empire into a new coherent form.


Old Opinion

Where is Linux going?

This is my opinion as a user and integrator of Linux and as the manager of StockWise.net LLC.

By the end of this year Corel will have the largest installed base of Linux workstations. The reason is simple. Corel's office suite works great and there is no other vendor that offers an equivalent product. Corel workgroups will replace Windows workgroups throughout most organizations because of cost. Managers worldwide will save corporations hundreds of millions of dollars by installing Corel workgroups that access NT applications via thin clients and workgroups that use WordPerfect 2000. Besides the move by corporations, the US Education system will use Corel because of cost. RedHat and others Linux distributions won't be considered because they don't have the Applications.

By the end of 2001 Oracle will be the World's largest software Company. Oracle will continue to benefit as the Internet continues to expand.

By the end of 2002 Microsoft will have the second largest installed base of Linux workstations and servers. If Microsoft doesn't soon port to Linux MSFT will be a ghost. Microsoft will slowly crumble as leading engineers and developers leave the company in search of more lucrative positions. As Microsoft's sales and earnings decline they will make the switch to Linux. But, in the end the move will not save their bottom line. At the end of 2002 the desktop operating system will be 87% free downloaded software from the linux organization. 35% of the Applications will be from ASP providers. Corel will lead in ASP applications. Microsoft will not make significant improvements in its market share because of price.

By the end of 2005 open-source applications will be on more workstations than Company manufactured applications. The reason again being economical. Additionally the code of open-source applications will be competetive because of a cultural change in programmers attitude toward development. Income and benefits will be better for developers of successful open-source than developers of CorporateWare. Like the authors of good novels the independant developer of open-source software will benefit tremendously from noted contributions. Profit margins of Corporateware will continue to shrink and the advantages over open-source will dwindle. Corporations don't stand a chance when cultural change erodes their profits.

As an investor I own some CORL and will continue to build a position in CORL until Microsoft makes its announcement that it is going to port to Linux. I'm waiting for the current correction to bottom before buying ORCL. I don't see any reason to own RedHat or VA Linux or Caldera...because profits are driven by sales and the leaders are already well defined.

As an integrator I'm not of the opinion that you can forget NT or Windows applications any time soon. I am very happy that UNIX (the best OS ever) has finally made its way to the desktop.