Subject: Re: Larry Ellison on FSBs
From: Don Marti <>
Date: Sat, 22 Apr 2006 14:58:14 -0700

begin Thomas Lord quotation of Wed, Apr 19, 2006 at 05:48:11PM -0700:
> LE> [....] I don’t think Oracle and IBM want to create a second Microsoft
> LE> in Red Hat. But you can’t – because Red Hat doesn’t own anything,
> LE> they own nothing. They couldn’t [become the next Microsoft], they
> LE> own nothing.
> Now, I know, LE has a reputation for being given to hyperbole but
> I don't see a word out of place in these comments. And they have
> a lot of implications.
> Does the mass-scale free software distribution model make any sense
> at all for investors seeking a long-term value play?

It does mean that an FSB only has value as a going
concern, and that not being valuable to acquirers
who want to do the buy+kill plan could push down the
company's market cap.

> What if RH really does outplay Sun, HP, IBM, and Oracle leaving
> their customers locked in to a company that "owns nothing" but a
> brand and some employment contracts? What happens next?

FedEx uses contractor-owned and operated trucks
for ground service, and they lease at least some of
their cargo aircraft.  But suppose they leased every
building, truck, and airplane -- and of course they
don't own the real estate where their drop-off boxes
stand, they only place them by permission.  Would they
"own nothing"?

Unless you're Jeff Bezos, your business relationship
with your OS provider is probably more complex than
your business relationship with your shipping company.

> Isn't it just a matter of time and effort before someone spends, at
> most, in the low 100s of millions of $ and knocks the sails out of
> LE's own product line with open source?

Already happening at the low end.  Microsoft and Open
Source race to eat bigger and bigger vendor lunches,
customers win, and we know how this story goes (not
that we don't like hearing it over and over.)

> And if all the value, in the future, lies mostly in *people* -- how
> do we small-time kibbitzers, today, leverage that insight?

Take what you can save on IT vendor price wars
and invest it in making the staff more productive?
(Start with a copy of _Time Management for System
Administrators_ by Thomas A. Limoncelli -- great book
and should get the in-house team more efficient on
the "fighting fires" so that you can get a DIY-IT
model going.)

> Probably the most important question: what's a smart customer (perhaps
> with a few bucks in his pocket) to do?

ISBN 0-596-00783-3

(Get it next-day delivery via FedEx; the saved time
will pay for itself.  Unless you're Larry Ellison,
in which case you can just start your own delivery
service and get your preferred vendors to start
using it.)

Don Marti