February 20th, 2008
Will open source be a victim in the Dot Bomb 2.0?
In some ways Dot Bomb 2.0 has already begun.
Google is down 27% since the start of the year. Once solid niches like consumer health are starting to falter.
As Time-Warner set off Dot Bomb 1.0 by acquiring AOL, putting a cap on potential Internet values, Microsoft may have set off the second through its bid for Yahoo, which seems to have shown that a premium on current prices isn’t there.
For the last few years the words “open source” have been what “e-commerce” was in the last decade, a secret sauce or code phrase which led greedy investors to the trough.
But real profits have been tough to come by, just as they were in e-commerce back in the day. Look at a chart for, say, Red Hat, and you wonder if the big bucks will ever arrive.
With the full cost of the Big Shitpile still unclear, fear is rapidly replacing greed on Wall Street. Even companies like Applied Materials are having trouble getting traction, despite talk that they’re a solar energy play.
(Full disclosure demands I mention my brother-in-law has worked at Applied for many years, and I have some AMAT in my retirement account. He’s due to retire this month.)
When markets roll over it’s those companies with weak profits which are shot first. First individual stocks, then whole sectors.
I’m not saying it’s time to call mom and tell her you’re moving back in your room. But every market goes through a boom, then a bust, before finding its footing, and the second stage may have just arrived for open source.
Dana Blankenhorn has been a business journalist for 30 years, a tech freelancer since 1983. You can follow Dana on Twitter. See his full profile and disclosure of his industry affiliations.
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