Subject: Re: Larry Ellison on FSBs
From: Don Marti <>
Date: Sun, 23 Apr 2006 14:04:46 -0700

begin Thomas Lord quotation of Sun, Apr 23, 2006 at 12:58:44PM -0700:
> Don Marti wrote:
> >No, I think that the set of services that we call
> >"shipping" is, for most customers, much simpler
> >to select, buy, and get help with than the set of
> >services we call "an operating system".
> >
> >(Ask the mailroom manager how long it would take to
> >switch from FedEx to UPS, then ask the IS manager how
> >long it would take to switch from Red Hat to Novell.)
> >
> >So if FedEx's value as a going concern doesn't depend
> >on whether they lease airplanes or whether they use
> >contract truck drivers, then Red Hat has value as
> >a going concern independent of whether they have a
> >proprietary interest in the software they package
> >and maintain.
> >  
> I see your logic but your analogy is too narrow.   It's a clever argument
> but FedEx -- whether leasing or owning (and is there much difference
> from an economist perspective for these questions) -- possesses a lot
> of rival goods (airport contracts, drop-off point contracts, etc) for which
> there is no analog in the OS business.

Supported platform status with ISVs?

Individuals with Red Hat Certified status?

Hardware vendor preload deals?

Availability preloaded at colos?

Contracts with content delivery networks for updates?

> This all comes down to that
> pesky "what is the nature of software" question that so often gets glossed
> over in business analysis.    Software is pretty different from the 
> intuitive
> physical space of goods and transport.

The more you look at where the actual value is,
and not where bits (which may have negative value)
are flowing, the more the software business looks
like other service businesses.

Don Marti