Where Is Red Hat Linux Going?

Considering the recent turmoil in the NASDAQ, particularly the spectacular declines in the Linux sector: Redhat, VALinux, Corel and others, should we really shy away from these stocks and emerging IT technologies? Here’s one IT professional’s opinion about Red Hat Linux and what’s happening today.

Where is Red Hat Linux going? Is Nasdaq RHAT now a good buy? I don’t have all the answers. (…and I’ll give you a hint… Nobody does.) However, RHAT may be a very good investment right now. OK so they might (???) not make any money for a few years. So what. In today’s strange market, there are lots of solid companies who make steady income, but their stocks are flat. Look at Amazon and others — it is all about perceived value. Cisco, Intel and Oracle are in the “safe” investing category. Long term I don’t include MSFT in that category.

RHAT is about Linux. People in the IT business (like me) think it is a good company and has a good future ahead of it. IT people know the facts about Red Hat, like Intel is behind them (with $s) and Oracle specifically uses RedHat Linux to develop Oracle for Linux. Linux is a very attractive operating system. You can’t beat the cost, and it is a good system. I have it in my house with an Oracle database running on top. When it comes to performance, Linux runs CIRCLES around NT, HANDS DOWN. It comes with mail, Apache (web server software), ftp server, and much, much more. To get the same stuff from Microsoft (and you can’t get it all) you would spend much, much MORE and get much, much LESS performance.

In its March/April 2000 issue, IT Professional had an article entitled “Linux Gains Enterprise Support”. They reported that a Dec ’99 survey of 300 IT managers indicated 26% use Linux, up from 14% in March of ’99. The article went on to explain the benefits and steady expansion of Linux in the Enterprise arena. The IEEE has the largest professional, technical, computer organization in the world. They set most of the standards on which software and hardware are developed. They are not a bunch of uninformed idiots. Linux supporters are not just nerds.

A sampling of investor sentiment can be found on the E*Trade – RedHat Discussion section in which many are saying that Linux is for geeks, loosers and misfits. Perhaps those that do say that did something like bought high on margin and then had to bail. Perhaps they are making wild stabs in retaliation for self inflicted misfortune. The negative publicity created by statements such as these generate negative sentiment about the stock. And down it goes even further. Why? Because most people don’t know the technology, and therefore can’t make an informed, intelligent decision on their own.

Microsoft is an important factor here. Microsoft products are NOT big in the market place because they are the best. MSFT has it’s position basically due to compatibility, cost, GUI, and VERY DIRTY marketing tricks. MSFT has done a good thing by providing almost complete downward compatibility. Their products are generally priced within reach. They have a pretty good GUI (Graphical User Interface – the windows, mouse, buttons, etc.). Now for the problems. The Windows operating system provides poor performance compared to Linux and other UNIX based systems. Microsoft’s operating system has not improved in performance for over a decade! You can see this if you compare Microsoft DOS 6.0 on an old Intel 386 at 25MHz with 8Meg of ram, to Windows 98 on a 450MHz Pentium II with 128Meg of ram. There is no overall gain in speed. There is arguably a degradation! A professional acquaintance of mine setup NT 4.0 on a state of the art machine (450MHz Pentium II, 128Meg ram, etc.) as a web server. For comparison he then setup RedHat Linux version 5.2 on a 486 with 16Meg of ram, etc. The Linux machine was much, much faster serving web pages, even though the hardware was much older. Microsoft actually uses a UNIX system for some of their web sites. Linux is a UNIX type system. But see for yourself, go to RedHat’s web page and see how fast it loads on your machine compared to other web sites.

This is not just about Windows vs. Linux. It is also about who you might want to invest in.

On top of truly poor performance Microsoft Windows provides remote administration HELL. You can’t really administer Windows machines from a remote location. You have to physically be where the machine is. Some people will argue with this. Oh, sure, there is the Windows Resource Kit, SMS, and various other utilities you can spend even more money on. The trouble is these extra utilities also have to be administered. And they rob system resources. And they require additional personnel to manage. And they increase your IT budget. And they don’t give the administrator access to everything they need. And they overly complicate an already overly complicated system!

IT professionals can very easily and completely manage Linux and other UNIX based machines remotely, with no additional software or cost. They can do this through a 1200 baud modem! (For those who don’t know, 1200 baud modems were around in the early ’80s. You can probably get them free today from a landfill.) The bottom line is an IT staff can completely administer Linux machines, and the software they run, from a central location, and at almost no extra cost. This allows standardization, security, cost control, etc. And you don’t have to have a network administrator in every building of your organization. Some people might say, “Yeah, but Windows puts power in the hands of the users, which allows them to manage their own issues.”

Remember, this is not just about IT systems. Microsoft has not only provided more software and processing control on the desk top machine with easy GUI access to system settings, fantastic programming capabilities in Microsoft Office, etc. Microsoft has also provided a big gun that users can blast their feet and legs off with! Let’s face it. The average user is not a systems expert or computer programmer. Our business community is now littered with innocent people who think they are IT professionals because they can create calculations in an Excel spreadsheet, make a web page with Front Page, or know how to create a database in Microsoft Access. Never mind if the spreadsheet or database calculates accurately or not. I am currently working on a project staffed mainly by a bunch of “Super Users”, each working in various misguided, uninformed, uneducated directions. This situation is costing the company un-measurable amounts of wasted money. My true IT professional colleagues relate the same experiences. Microsoft has helped create this condition by providing the type of software they sell, and marketing it the way they do.

So why are these apparent problems with Windows, and differences with Linux important to investors?

Because investors should be informed about what they are investing in. The Windows vs. Linux issues discussed here are important because true IT professionals recognize these problems. Consequently we are working and looking for ways to resolve them while at the same time reducing IT operating costs. There is a big movement back toward central processing and administration. Linux is an attractive, cost effective way of doing this. RedHat is a prominent company who provides software to install, distribute, and maintain it.

Ok. So what about other comments from the doomsday crowd? They say that Linux is developed by people who don’t get paid, insinuating that this reduces quality, accountability, and increases time to market, ultimately eliminating profit.

Wrong. You don’t get what you pay for. In fact, in today’s IT market you can pay a lot for something and get nothing but chaos in return. In today’s IT market you get what you deserve based on your technical knowledge and expectations. I have talked to various customers who literally threw away $10,000+ software because it was too buggy and did not work. The project I am on now has cost the company I’m with well over 5 Million. The software I support is off the shelf, yet as an employee of the company who bought it, I spend a tremendous amount of my time debugging and working with the vendor to get their problems corrected. Management sometimes jokes about how we should be charging the vendor for my services, yet we are paying big dollars for theirs. There are a lot of snake oil salesmen in the IT market today, selling both services and software. The market is very hot, and the sleaze bags are skimming everything off the top they can. The fact that Linux is developed for free is a very good thing. It means that the people developing it do it for fun. They get personal enjoyment from it, and have pride in what they do. How better can you ensure quality? How better can you control costs? You have NO development costs! I bet that the doomsdayers have never even looked at a Linux system. It is very impressive for a system that can be obtained literally for free.

So who would you invest in? A company that is being sued by the government, or a new company in good standing with the IT community? A company that produces low performance products, or one that produces high performance products? A company that produces products which are cumbersome and logistically difficult to administer in moderate to large enterprises (at additional costs), or one that produces products which are easily administered from anywhere at no extra cost? A company that is working to RESOLVE high dollar IT concerns, or a company that CREATES high dollar IT concerns?

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