About Sun, Redhat and a wacky stock market
Friday was strange day. It was the first time, RedHat had a higher market capitalization than Sun (albeit just for a short time). At that day several newsoutlets reported about this … for example Matt Asay, who speculated about the “inauguration” of the linux market. Well … i have a different perspective to this.
I already hear: “Obviously. You are working for Sun”. But my opinion has a different source. I´m observing Sun for quite a while now. Longer than i work for them. I worked in a startup and used Sun systems there. So i know Sun since its glory dot.com days. My personal opinion about the market capitalisation reaches back in that time. In the dot.com days Sun could do everything and the analysts and the press cheered, albeit some of the issues at Sun reached back into that time (our belated entry to x86 market e.g.). Many people invested their money into Sun and well … with the .com bubble burst they lost their money. Those people hate us now for the lost money. I wasn´t invested in Sun at that time. But i would react in the same way. You don´t touch a hot surface twice, unless you are really confident it has cooled down. You don´t buy stocks of a company, that lead to lost money, when you are not confident about it, and even when you are confident about that, you think twice, just because you remember the hot surface. That´s psychological phenomenon. BTW: I assume some journalists hate us because the stock performance proofed their cheerings wrong. Other journalists just need a good headline. And then there are a certain amount of hidden-agenda-driven journalists or analysts. My personal view to the IT news world is that some journalists are as vendor independent as the author behind this blog. But that is just my personal perspective. Today we do most things right. But the analysts just do fingerpointing to other issues as soon we iron out an issue. No positive lookout. I tend to say: “When we announce ‘Sun cures all kinds of cancer’ tomorrow morning, our stock wouldn´t skyrocket, we would punished by the analysts and media with ‘Sun not focussed enough’”. An example for the negative press: We open sourced the core of the Sun Java System Web Server recently. The press didn´t concentrated on the fact, that we opensourced the core of proven, high-end webserver with a lineage back to the venerable Netscape Commerce Server. No, they just concentrated on the parts we ripped out of it, without asking why we did it. It´s hard to counter such comments. BTW: This is one of the reasons, why this blog exists. Further you have to take into consideration, that the stock markets isn´t really a market as most assume. It´s a melange of psychogical influences, speculation uninterested in the real world as long they could win a tenth of a cent by buying stocks in New York and selling them a tenth of second later in London. At many broker houses there aren´t any brokers in buy/sell decision … computers using chart analytics and expert systems analysing the press decide. Earning money with stocks got too fast for humans. A computer doesn´t understand the importance of decision directed in future. Non-IT people doesn´t understand the importance of decisions for the future. But both influence the stock price. Example: Many analysts wanted us to give up Solaris. Without Solaris, no ZFS, without ZFS no Amber Road, without Amber Road no Sun Storage 7000 series, without Sun Storage 7000 no new inroad to the storage market. Try to explain this to an analyst or to an computer broking system (well, i assume it´s easier to explain this to second one). I assume it´s absolutly impossible to explain to an analyst that you must start an development some years before you can get money from it, when the attention horizon is just a two or three quarters in the future. There are many people who says: The stock market is a bet on the future. But who makes the the bet? People without any knowledge in IT. The probability of error at predicting the future is 1. The question is just the the time scale. But it´s even hard for experts in a certain matter to predict the future correctly about a time of two or three years. How can you expect a better quality from journalists or analysts? So … at the end the stock market is just a consequence of more or less educated guesses in conjunction with a really large heap of emotions and feelings. The stock of IBM doesn´t go up because the people understand the business model of IBM or the strenghts and weaknesses of IBM … it just goes up, because the earnings give the people a warm and fuzzy feeling about their money. There is no other explanation why a company that sells goods worth half a billion is much as worth as a company selling goods in the worth of 13 billion. There is no logic behind it. That´s the very reason, why the stock is down. It´s not an inauguration of anything. It´s just a sign how mad our stock markets got. I don´t assume that this will change. The stock markets will be dominated by speculators, not by knowledgeable investors. But i´m sure the outlook for Sun will change at a point in the future. So Matt Asay is right in his comment:
Given enough time for its open-source strategy to play out, Sun's market capitalization will likely recover and outpace Red Hat's.