Good things will come from the recession

2002. That was the year I graduated from law school. It's also the year I left my employer--embedded-Linux vendor Lineo--to join Novell.

For years, I wondered how I had managed to be the only person in Silicon Valley not to make a billion dollars--only to discover in 2002, coming on the heels of the 2001 dot-com bust and ensuing recesson, that finding a paying job was the only thing that mattered. The billions could wait.

A funny thing happened on the way to the medicine cabinet to grab a bucketful of Prozac: Linux began to boom.

I was at Novell when Novell Vice Chairman Chris Stone and others began to feel their way toward Linux, first with the Ximian acquisition and then with the Suse acquisition. Novell's fortunes revived, even as Red Hat's stock went on a tear. That recession was very good to open source.

I expect the same will happen this time, both for open source and SaaS, as well as for other software-delivery strategies that lower barriers and prices for enterprises. No, not every open-source company will succeed. Some will be rudely battered by the recession, and I doubt if any will escape it wholly unscathed.

For those who lose their jobs in this mess (over 140,000 in 2008 so far, with more to come), I feel for you. I sincerely do. I have a family member who was out of work for over two years during the last recession. It was one of the most frustrating and heart-rending experiences I've ever witnessed.

But it ended well for him, and this recession will make stronger companies, employees, and entrepreneurs of us all--or can if we'll allow it to do so.

The big vendors like Sun Microsystems, Novell, and Red Hat should be using this relative lack of Wall Street scrutiny to be bold and take strategic risks. Novell was reborn in the last recession. Wall Street has already clobbered your stock prices simply because you exist. It's hard to imagine that it will bother to actually think about new product directions long enough to take a calculated swing again over disputes about strategy.

For small companies, now is the time to acquire market share and retain customers at all costs. Most open-source companies are still dealing in tens of millions in sales, which makes it easier to grow in a tight economy. A $250,000 deal might not move the needle for an incumbent competitor, but can be a big deal for us. Fight for every penny.

I'm optimistic. A bad economy gives us the opportunity and incentive to be bold. Good things come from bold actions. Let's see what we can do.

[matthorany]

Novell/Linux has been a life-saver for our enterprise. Better performance, cheaper solutions, better licensing, the list goes on and on. We keep trying to justify going to Microsoft but continue to find that's it's just not pratical. Novell offers Virtualization and Groupwise 8 looks amazing as well.

[top8]

Matt, great post, thank you.

[Penguinisto]

Loved the post - and yeah, I agree big-time... during the dot-bust Linux positively thrived overall, and I daresay it saved Novell's bacon, among other things.

/P

[YankeePoodle]

How many recessions would Linux need ? This same crappy argument keeps on coming. People will hunker down and keep the things they have, and no only few do switch to free software most dont switch because there is cost involved in switching