MESSAGE
| DATE | 2003-06-09 |
| FROM | From: "Inker, Evan"
|
| SUBJECT | Subject: [hangout] LINUX THREAT TO MICROSOFT IS VERY REAL
|
LINUX THREAT TO MICROSOFT IS VERY REAL
By LAUREN BARACK
June 6, 2003 -- That Penguin is growing some teeth.
Steve Ballmer's e-mail detailing Linux as a threat shook The Street
yesterday - and possibly some confidence in Microsoft's reign.
"Linux is a major, growing threat to Windows," said Art Russell, a research
analyst at Edward Jones. "It's hard to compete with free in a tough economy
when people are trying to do more with less."
Microsoft's stock traded at nearly double its daily average volume
yesterday, after company CEO Ballmer's worries became known. Nearly 116
million shares changed hands - more than twice the daily average volume of
61.5 million. The stock closed down 78 cents, or 3.1 percent, to end the day
at $24.09.
Although not the first time Ballmer has voiced concern about the free rival
software, his comment in an internal e-mail appeared ill-timed following the
sale of more than $1.4 billion of his own Microsoft stock. It was the first
time Ballmer has sold shares since 1991.
While not even a blip in Ballmer's eye back then, Linux has grown into a
serious concern - not one that should be taken lightly, experts believe.
"It's the fastest growing server operating system," Russell said of Linux.
"And Microsoft had better be concerned about it."
Price is definitely one lure for the freely distributed Linux, although
companies usually need to pay for some maintenance of the software.
But another strong appeal is that it's simply not Microsoft.
After years of appearing to bully its competitors - and in some cases
shutting them down - Microsoft's reputation has come back to bite it.
"That's what monopolies do," said Frederick Berenstein, the co-chairman of
Linux start-up Xandros.
Berenstein created Xandros after Microsoft purchased Corel - and dumped its
Linux business. That move now looks a little shortsighted for the software
giant.
"They think they're a monopoly, they act like a monopoly and they do
something so atrocious people don't want to deal with them," he said.
Now Microsoft has to deal with Linux.
Microsoft has already started a fund to try to undercut the price of anyone
making a bid against it. But in a preliminary bid for supplying software to
the Munich City Council in Germany, Microsoft lost to Linux - despite
offering the lowest price, Berenstein said.
"Microsoft pays more attention to Linux than to anything else," said David
Smith, an analyst with Gartner. "But Microsoft is always looking for
anything that can hurt the company."
Regards,
Evan M. Inker (New York) x. 4615
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