Subject: Re: Is the party over?
From: Seth Gordon <sethg@ropine.com>
Date: 14 Jun 2001 14:25:04 -0000

A few points to ponder:

(1) I've recently started reading Burton Malkiel's _A Random Walk Down
    Wall Street_.  One chapter discusses the history of stock-market
    bubbles.  I was especially intrigued by the "tronics boom" in
    1959-1961, when IPOs were hot, and electronics-related IPOs were
    particularly hot -- every stock with "tron" or "onic" in its name
    seemed a sure-fire hit.  In 1962, everything came crashing down
    again.

    A lot of people made stupid investments in both the electronics
    bubble.  However, electronic equipment obviously plays a larger role
    in the economy now than it did in 1962.  By the same token, you should
    not confuse the short-term fortunes of publically traded companies
    that specialize in Linux with the long-term viability of Linux as an
    operating system.

(2) When Microsoft first announced that it was developing Windows NT,
    a lot of people in the software industry treated it as the death
    knell for Unix -- because *of course*, once Microsoft, the
    800-pound gorrilla of the desktop, went up against the squabbling
    horde of Unix vendors, Microsoft would win.  And I suspect that if
    you took a time machine back to, say, 1993, and told some
    prominent Linux hacker that Microsoft would eventually recognize
    Linux as one of its main competitive threats, the Linux hacker
    would think you were on crack.  So compared with back then, the
    situation looks pretty good.

(3) Microsoft has some very smart people running it, and when charged
    with finding a business strategy to counter Linux, they've come up
    with a smart plan.  They also have a marketing team that is very
    good projecting an aura of invincibility, and they weathered the
    dot-com bubble while preserving a large war chest.  However, that
    does not make Microsoft invincible.

(4) In order to satisfy its investors (and, more importantly, the
    employees who are motivated by their stock options), Microsoft
    *must* maintain a high growth rate.  If open-source competitors
    are successful enough that Microsoft sales *don't grow as fast as
    expected*, it's practically a victory.

-- 
"Rav would never cross a bridge when an idolator was on it; he said, 'Maybe he
will be judged and I will be taken with him.'  Shmuel would only cross a
bridge when an idolator was on it; he said, 'Satan cannot rule two nations [at
once].'  Rabbi Yannai would examine [the bridge] and cross."  --Shabbat 32a
== Seth Gordon == sethg@ropine.com == http://ropine.com/ == std. disclaimer ==