Google (GOOG) has launched free spreadsheet and word processing products, but they are unlikely to pull customers away from Windows. The products simply don’t have enough integrated features. Apple’s (AAPL) Leopard OS appears to work fine, but word is that it is "buggy" on PCs. It probably works on Macs.
But, the real challenge to Microsoft’s (MSFT) software dominance was supposed to be Linux, the open source software initiative first released in 1991. The systems was free, it had many of the features of Windows. It was set up to run well on enterprise servers.
There have been questions recently about whether the Linux software base violates Microsoft’s patents. Redmond says the there are over 200 violations, but so far it has not pressed that case. And, it may not have to.
The largest standalone marketer of the Linux OS is Redhat (RHT). It announced its earnings for the last quarter. The growth was impressive. Net income rose from $13.8 million to $16.2 million. Revenue was up to $118.9 million from $84 million. For the next quarter, the company believes revenue will be about $125.
While Novell (NOVL) and Oracle (ORCL) sell some Linux products, Redhat is the standard bearer.
Stop for a moment and think how tiny the Redhat revenue is. If the year goes well, the company might do $500 million. Microsoft’s revenue run rate is above $45 billion.
Why hasn’t Linux caught on? It is probably not an intellectual property issue. On Wall St. the problem of managing a number of difficult pieces is know as "herding cats". Linux has that problem. It has no single development authority. It has thousand of programmers all over the world. No one tells them what to do. The are informally organized into groups.
Microsoft Windows does well, and will continue to do so, because its main competition has very little coherent direction.
It is the kind of rival any company would pay to have.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
