- By Tony Stanco-
A free software strategic analysis -
There is a certain irony in hoisting protagonists by their own petard
appeals to my
sense of poetic justice.
Everyone knows by now that Microsoft netscaped Netscape by "cutting
to a major revenue source when it bundled Internet Explorer with its
act became the central issue in the federal government's anti-trust
U.S. v. Microsoft.
A company that has major
sources lopped off faces a certain business inevitability, and it was only a matter of time before Netscape
to the point
where it either had to shut down or be purchased by another company.
eventually purchased by AOL.
So what if someone did the same thing to Microsoft, wouldn't that be
Here's the strategic analysis:
IBM should takeover Corel and turn the WordPerfect office products over
IBM is trying very hard to befriend free software developers, and
community like GPLing proprietary code. Free software developers are
fresh meat in that regard. So by purchasing Corel and turning over the
software to the community, IBM cements its position with the GPL
firmly than any PR program, jawboning, or mere monetary largess can
At the same time, IBM will severely weaken a major competitor, because
WordPerfect product line GPLed, IBM and other hardware companies can
products into their PCs without paying licensing fees. They can then
maintenance and development costs to the free software community, as
live off the
Because Microsoft's office productivity line is a major revenue stream,
"netscaping" Microsoft, just like Microsoft netscaped Netscape half a
there's a certain delicious irony in that.
But it gets even better.
Recently, the market price for Corel shares was as low as $1.25, which
it a market
cap of less than $100 million. Well, Corel has about $125 million in
the bank, so
effectively IBM can get the company with Corel's own money. It's
while since the
financial markets allowed this kind of transaction. But the current
such that companies are once again selling for less than what the
have as real
Why is that a perfect irony?
The cash in the bank at Corel that IBM can use to purchase the company
Microsoft came from Microsoft itself a few months ago when it invested
the company! Now that's sweet.
Microsoft gave the money to Corel when it was in financial straits
unraveled, and Microsoft saw the opportunity to marginalize a
its products into its .Net strategy. Since then, rumors in the press
officials thought that Microsoft's investment was best undone, and it
company's is now obliging.
If that bad investment in Corel finances the purchase of the
assets by IBM
that then cuts off the air supply to a major revenue stream at
that is poetic
justice and the world is again just.
(While the market price for Corel has bounced off from that $1.25 low,
still has a
market cap not far from the amount of cash in the bank and this would
move for IBM at any price, even if it had to use a few million dollars
from, say, the $1 billion it has earmarked for Linux
Tony Stanco is a former securities attorney from the Securities and
Commission, Internet and software group. He left the Commission to
FreeDevelopers.net, because proprietary software must be defeated
puts all of us
in cyberchains. FreeDevelopers.net is an international, professional
organization of GPL
software developers. All GPL developers are invited to join
Copyright 2001 Tony Stanco
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