Creative Destruction from Linux

Now for the good news. With CEOs in a funk and the country on edge, it's nice to see a new technology roiling the business world, injecting the kind of energy we haven't seen since the good old 1990s. From the bottom up, a group of open-source programmers from all over the world, hooked up via the Internet, is revolutionizing software with its Linux operating system. Flexible enough to run IBM (IBM ) servers, Sony PlayStations, Motorola (MOT ) cell phones, and TiVo (TIVO ) TV-program recorders, Linux can be downloaded from the Net for free. Well, almost. Corporations typically buy it as part of a package that includes service. But nearly free is enough to shake up the digital world and remind us once again just how exciting business can be.

Some winners and losers are already coming into focus. IBM, surfing the edge of a new high-tech wave for the first time in decades, is backing Linux big-time. Intel (INTC ) is making Linux-based chips. Dell Computer (DELL ) is selling cheap Linux-based servers, and Red Hat (RHAT ) is the leading purveyor of Linux itself. Sun Microsystems (SUNW ), however, is scrambling in the face of the new competition. Online stock trading site E*Trade (ET ) replaced its 60 $250,000 Sun computers based on Sun's Sparc chip with 80 Intel-based Linux machines costing just $4,000 each. Microsoft (MSFT ), long in denial, is rushing to compete with Linux. The operating system is not only cheaper but also is an alternative for companies that don't want to be locked into Microsoft's proprietary software.

A new technology, monopolies threatened, corporations rising and falling. Gosh, this is a lot of fun. Remember?

    Before it's here, it's on the Bloomberg Terminal.