He's back! Dr. Salus is back from vacation, and here's this week's installment in his ongoing history, The Daemon, the GNU and the Penguin, Chapter 23, titled "Oceans of FUD." You will find earlier chapters here if you are just joining us now.A couple of things I want to mention: Dr. Salus mentions Microsoft's Five Linux Myths page being no longer available at its original location. However, LWN.net had a helpful article discussing it, which will give you an idea of its contents, if you are curious. And within minutes, a reader has provided a link to Internet Archive's copy. I also am providing a small warning on the link to footnote 5, because it links to Sys-con's neo-LinuxWorld, which now has an annoying ad policy, whereby a large banner ad covers the article, without being a popup in the usual sense, and so you can't avoid it by blocking popups and to make it go away, you are obligated to click on it. I think such a policy will lead to inaccurate ad-view numbers, since it makes it appear that 100% of readers are interested in the ad when that is not true. Not wishing to contribute to inaccuracy, I'll mention that if you are using Firefox, turning off Javascript makes it possible to read the article without having to click on an ad that you actually have no interest in. Of course, if you wish to view it with Javascript on, so you can read the banner ad, feel free. And it's an article we've read before, so most of us have no need to read it again.
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The Daemon, the GNU and the Penguin
~ by Dr. Peter H. Salus
Chapter 23: Oceans of FUD
When Gene Amdahl coined the word "FUD" (for fear, uncertainty and doubt) in the mid-1970s, his
ire was aimed at Frank Cary, chairman of the Board at
IBM, who was waging a no-holds-barred attack on Amdahl,
Itel, Control Data, and the other small companies that
were selling machines that competed with the IBM 360/168.
According to Robert Sobel:1
The campaign began in a conventional fashion. IBM
salesmen and executives visited clients who were thought
to be considering plug-compatible machines, to warn them
of problems that might arise should Amdahl or National
Semicomputer leave the business. There was talk of reduced
maintenance on IBM peripheral equipment hooked onto other
mainframes, of software changes to eliminate or reduce
compatibility, and of alterations in hardware that could
make the Amdahls less compatible than advertised.
Sound familiar?
By the end of 1997, Eric Raymond had delivered "The Cathedral
and the Bazaar" at least twice: at Linux Kongress in May and
at the Perl Conference in November. It appeared on First
Monday online in 1998, on paper in Matrix News in three
installments (June, July and August 1998), and in book form in
1999. It does not seem to have been read in Redmond, WA.2
In the May 1999 issue of Microsoft Internet Developer,
Douglas Boling wrote:
While free distribution is a great marketing tool (think
about all those samples you get in the mail), what does it
say about the product itself? Frankly, it says that the
product (or the effort that went into making the product)
has no value. Is that what you software engineers out
there want?
... If ... you gave away all software, how would you pay
the creators of that software?
Boling goes on, but I'll spare my readers. I was also
going to cite Microsoft's "Linux myths," but that page is no
longer accessible at http://www.microsoft.com/ntserver/nts/news/msnw/LinuxMyths
/asp
It was there I read that there were "hundreds of UNIX
vendors with no 'standard' flavor of UNIX" [take that,
POSIX!]. And that "Windows NT 4.0 Outperforms Linux on
Common Customer Workloads" [inability of the Linux stack to
handle multiple network cards on SMP machines adequately
was the vital "Customer Workload," incidentally].
But in August 1999 Red Hat had its IPO and, by Christmas,
it had acquired Cygnus and VA Linux Systems had had its
IPO. Free software was becoming big business.
But then, so was nearly everything else. Pets.com, boo.com,
and a variety of other fantasies blew hundreds of millions of
dollars.
In 1999 we were nearly at the peak of what was (retrospectively)
known as the Dot-Com bubble: the dot-bomb. But a look at history
is needed.
NASDAQ was begun in 1951. By 1990 it was a good-sized marketplace
with a large number of new and recently-formed corporations holding
their IPOs (Initial Public Offerings). Many of these were hi-tech;
many were in areas previously untested -- selling products over
the Internet, setting up and using Web sites, indulging in
e-commerce rather than selling products in shops. Some of the
new companies were actually involved in Information Technology,
rather than using it. But they all seemed to show great promise, and folks
didn't want to miss the boat.
After the stock market crash of 1987 (in which the Dow-Jones average
dropped 22.6% and lost about $500 billion on October 19), the markets
around the world continued their bullish ways. In the early 1990s,
the personal computer was becoming a household object and the advent
of the Web made access yet more user-friendly. 1994 saw the
business world "discover" the Internet as a commercial opportunity,
and yet more companies were formed. Amazon began in 1994; eBay in
1995. On December 5, 1996, Alan Greenspan warned of "irrational
exuberance" as evidenced by the rapidly rising stock prices.
In 1997, NASDAQ announced a new listing standard: it would base
new listings on market capitalization alone, basically telling the world
that accounting regulations hindered many new firms, preventing them
from listing. There was a surge of registrations. In fact, "nearly
50% of the new listings between Aug 1997 and June 2000 entered under
the market capitalization standard." 3
Greenspan's warning didn't count. From 1996 to 2000, NASDAQ went from 600
to 5000. And then it crashed. Within six weeks, NASDAQ dropped from 5000
to 2000, then to 800 (in 2002). MicroStrategy, a soaring business-software
provider, fell from $3500 per share to $4, the victim of an accounting
scam. On December 14, 2000, it was at $15.19. The emperor had no clothes.
On March 10, 2000, the NASDAQ fell from its peak of 5132.52. Over five years
later, at the end of 2005, it had climbed back to 2200. Even Microsoft dropped
from over $60/share to $20/share in 2000-2001, losing two-thirds of its
(paper) value. It closed 2005 at under 50% of its peak.
Looking at Klein and Mohanram again, "367 non-financial firms [were] listed
under the Type 3 criteria between ... August 1997 and the end of the hi-tech
IPO boom in June 2000. Without this alternative, none of these 367 firms
would have entered the NNM [NASDAQ National Market] on their entry date."
Moreover, "over a four-year event-time window, Type 3 firms earn significantly
less than other NNM new listings..."
Klein and Mohanram illustrate that the inflation of the bubble (and its
bursting) were not merely "irrational exhuberance," but specifically an
"irrational exhuberance" concerning barely-understood yet extensively
hyped hi-tech ventures. No idea was too bizarre to invest in.
These last few paragraphs are a background. The rise and ebb of FUD has
consistently followed the rise and fall of the stock market or the rise
and fall of (perceived) commercial threats. Thirty years ago, the rise
of "other" mainframes worried IBM. The collapse of its stock price
worried Microsoft. So did the fact that new offerings were not really
in the offing.
One of the useful forms of past FUD had been "preannouncement" -- press
concerning wonders of the future. Following what appeared in The
Register, we can find:
- July 27, 2001: "an intermediate release ... dubbed 'Longhorn' will
... slip out late next year or early 2003."
- August 7, 2001: "the next release of Windows Server, codenamed
Longhorn and due in mid 2003..."
- October 24, 2001: "the wheels have come off the Windows rollout
wagon..."
- May 8, 2003: "It will assuredly be stuff that's in Longhorn ... but
we detect bits that must currently be missing, and that will be hard, if not
impossible, to execute by 2004."
- August 27, 2004: "Microsoft project managers have demanded that
features be jettisoned in order for the next major version of Windows
to ship as projected by 2006..."
- May 19, 2005: "Gartner says the first Longhorn client could slip
into 2007..."
But then, on July 22, 2005, Microsoft issued a press release: Media
Alert: Microsoft Unveils Official Name for "Longhorn" and Sets Date
for First Beta Targeted at Developers and Professionals. The date
of release was August 3, 2005.
What's the function of this?
Let's suppose that you're the CIO or CTO reporting to the CEO
of a Fortune 1000 company. Microsoft targets its marketing pitch
at that CEO. Your company is going to invest lots of cash, dollars,
yen, pounds, euros. Do you take a chance on the unknown (Mandriva, SuSE,
Red Hat) or stay with the familiar (known to your CEO) and wait? Remember:
No one ever got fired for buying {IBM, XEROX}.
Preannouncement is one tactic; planting "news" is another; questioning
bonae fides is a third.
As an illustration, here are some data from 2003:
- March 2003. Caldera (d/b/a The SCO Group) files suit against
IBM in 3rd Judicial District, Salt Lake County, court.
- March 25, 2003. The case is removed to Federal jurisdiction.
- May 29, 2003. Chris Sontag, SCO Group's "senior vice president
and general manager of SCOsource Division," tells Patrick Thibodeau of
Computerworld: "There is no mechanism in Linux to ensure
[the legality of the] intellectual property being contributed by
various people. ... I would suspend any new Linux activities until
this is all sorted out."
- The 1Q2003 Caldera filing with the SEC reveals nearly $10 million
income from two license sales: to Microsoft and Sun.
- October 16, 2003: Press Release: "$50 Million Private Investment Transaction
Led by BayStar Capital Provides SCO With Funding for ... and the Protection
of the Company's Intellectual Property Assets." (This was later altered to
"from Two Investors including BayStar Capital..." The SEC 8K and purchase
agreement reveals the second (larger) PIPE investor to be the Royal Bank of
Canada.)
License fees, private equity investments. Shoring up confidence in a
company; raising questions for potential customers; stalling for time
when an OS is delayed; paying the lawyers (Boies, Schiller received a $31
million fee).
Nearly a year earlier, in 2002, the Alexis de Tocqueville Institution issued
a white paper by Kenneth Brown using, according to Richard Forno, "'terrorism' and 'national security' [in ] shameful
attempts to use fear, uncertainty and doubt to push Microsoft's monopolistic
agenda." 4
In
May 2004, the Institution and Brown resurfaced. This time, Brown put
out a "study" which claimed that Linus Torvalds wasn't the father of
Linux at all. Here's a part of the press release:
In one of the few extensive and critical studies on the source of open source
code, Kenneth Brown, president of AdTI, traces the free software movement over
three decades -- from its romantic but questionable beginnings, through its
evolution to a commercial effort that draws on unpaid contributions from thousands
of programmers.
Among other points, the study directly challenges Linus Torvalds' claim to be
the inventor of Linux.
Brown's account is based on extensive interviews with more than two dozen leading
technologists in the United States, Europe, and Australia, including Richard
Stallman, Dennis Ritchie, and Andrew Tanenbaum.
"The report," according to Gregory Fossedal, a Tocqueville senior fellow, "raises
important questions that all developers and users of open source code must face.
"One cannot group all open source programmers together. Many are rigorous and
respectful of intellectual property. Others, though, speak of intellectual property
rights -- at least when it comes to the property of others -- with open contempt."
Linus responded, saying it was true -- he had been found out, "The true fathers
of Linux are Santa Claus and the Tooth Fairy."5
Andy Tanenbaum was less easygoing: "Brown is not the sharpest knife in the
drawer," he posted.
While listed as a 124-page E-Book, Mr. Brown's opus is "not yet available,"
over 18 months after the press release.
In general, FUD has quite limited utility. In the 1970s it could be somewhat
effective. The growth of the Internet has reduced that: reality moves around
at the speed of light. And while Don Basilio was right about rumors (in
Rossini's "Barber of Seville"), technology has caught up with him.
1IBM: Colossus in
Transition (Times Books, 1981), chapter 15
2There will be further discussion in a future chapter on "literature."
3
I am indebted to the extensive
analysis of April Klein and Partha Mohanram, "They Came, they Conquered,
they Collapsed" (March 2005). http://www.lerner.udel.edu/finance/Seminar_Papers/listingrequirements_7.pdf
4"Alexis de Tocqueville Serves Up a Red Herring," Security Focus June 19, 2002. The paper,
"Opening the Open Source Debate," is available at http://www.adti.net/ip/opensource.pdf.
5Linus Discloses "Real" Fathers of Linux," LinuxWorld May 17, 2004.
Dr. Salus is the author of "A Quarter Century of UNIX" (which you can obtain here, here, here and here) and several other books, including "HPL: Little Languages and Tools", "Big Book of Ipv6 Addressing Rfcs", "Handbook of Programming Languages (HPL): Imperative Programming Languages", "Casting the Net: From ARPANET to INTERNET and Beyond", and "The Handbook of Programming Languages (HPL): Functional, Concurrent and Logic Programming Languages". There is an interview with him, audio and video,"codebytes: A History of UNIX and UNIX Licences" which was done in 2001 at a USENIX conference. Dr. Salus has served as Executive Director of the USENIX Association. This work is licensed under the Creative Commons
Attribution-NonCommercial-NoDerivs License. To view
a copy of this license, visit
http://creativecommons.org/licenses/by-nc-nd/2.0/
or send a letter to Creative Commons, 559 Nathan Abbott Way,
Stanford, California 94305, USA.
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