Zune article: http://bits.blogs.nytimes.com/2008/12/31/the-day-microsoft-zunes-stood-still/

IE losing market share: http://online.wsj.com/article/SB123092719894149695.html#articleTabs%3Dcomments

I don’t particularly agree with the bailout of the auto industry. Sure I have some nostalgic love for Ford, GM and Chrysler, but my beef is that we the people are supporting a broken business model that is destined to fail even after our taxes prolong the inevitable death. After reading this article in the Wall Street Journal (as well as a few other articles) I’m willing to pronounce that one of the most efficient uses of government bailout dollars, outside the banking system, is to provide short term financing to small businesses.

What’s the Real Problem?

The real problem is not necessarily a lack of customers or progress. Mainly, it’s a short term cash problem. Business A is waiting on their accounts receivables to come in so they can pay their bills to Business B. Business B is waiting on A so they can pay C. The phenomenon continues in this cascade of capital lockup.

Businesses are largely not reporting crippling sales declines or other top line dangers. Small businesses are also some of the most efficient companies in the world so their bottom lines cannot get much leaner. They’re also the types that capital freezes affect the most.  The true problem is the working capital needed to sustain their operations while the A/R – A/P cascade (above) continues.

Can The Business Models Survive?

My beef with the auto industry bailout is that the business model has been in trouble for a long time. Honda, Toyota and Kia, to name a few, have solid businesses that are using US labor and moving the cars out of the showrooms into our garages. The Big Three have labor costs that are way out of whack with the actual value the labor provides the business. Further, innovation from the Big Three has been limited in comparison to foreign auto makers.

Tangentially, saving Chevy based on the promise of the Volt is a risky bet. It would be best served by spinning the Volt off into its own company and then pursuing venture capital to execute that new business model. Venture capitalists have the stomach and smarts to fund companies with millions of dollars based on the promise that a business model will emerge when the product goes to market. Venture capital is not necessarily a responsible use of our tax dollars.

But I digress. The main point that should be made is that the business models of the Big Three auto makers is antiquated and insolvent in any economy, especially a tough one.

The Government Should Fund Robust Business Models

Banks are pulling small business lines of credit because of their own tight cash flows. This is a major contribution to the crunch on cash flow of the small business. If the government is to rescue any industry, it has the responsibility to invest wisely in businesses that will be around in a year to repay their bailout either as a loan or as a contribution to a growing economy.

Small businesses, taken as a whole, are on a growth path and are limited by short term working capital. Loaning this working capital at reasonable interest rates not only ensures these businesses survive, it is also a more diversified and responsible investment.

Small businesses are 99.7% of all private enterprises in America and employ 50% of all private sector employees (source). Rather than focusing billions of dollars on failing business models that support a fraction of American labor, I propose a more diversified, responsible investment into companies that represent the sweat and tears of America’s gutsiest.

The article was profound in explaining Linux’s potential power play in the netbook arena; netbooks are small low power laptops. They’re great for surfing the web, doing emails and many other normal, everyday, tasks. Their low power makes them very affordable but has a major shortcoming when it comes to loading an operating system. Without a lot of memory (Ram) or hard drive space, large operating systems with many background processes would cripple the tiny netbook and render them useless.

Enter Linux. Linux is a highly configurable dream of an operating system that technologists love to play with. Because of its configurability, it’s a perfect candidate to run on a netbook. Processes that are never used can be shut off automatically. Shutting down processes means 1) more memory to do web surfing 2) more processor cycles for web surfing and 3) less space taken up on the hard drive.

Another very important consideration is spyware/malware. Linux is a very secure system by its very nature. The kernel (the brains of the OS) is more protected by its very design. Because of its seemingly insignificant market penetration, spammers and malware developers don’t have any incentive to develop their bugs for this OS. Linux wins again.

Finally, slapping Linux on the netbook follows a bigger trend in the commodization of hardware. Computers are getting cheaper and cheaper as business processes become more efficient and components become less expensive. The operating system has become a bigger slice of the total purchase price of a system. As hardware continues to become more of a commodity, vendors like IBM, HP and DELL will look for ways to jettison the proportionately higher cost of the OS.

As netbooks become more popular, Linux will become more familiar. This familiarity will enhance a seemingly insignificant player in the consumer operating system battle and that could really change the game.

original link:

http://www.fastcompany.com/blog/chris-dannen/techwatch/2009-year-linux-revolution

link: http://sethgodin.typepad.com/seths_blog/2008/12/selling-ideas-t.html