From the Publisher: The price of plotting

Five hundred years have passed, but the dark intrigue and Machiavellian schemes being spun by some of our most powerful contemporary princes undoubtedly would seem right at home in the infamous House of Borgia. Cesare and Lucrezia surely would have savored the corporate maneuvering we’ve witnessed this season by SCO Group, Novell, SuSE, PeopleSoft, Palm, Microsoft, Oracle, and the like. But for consumers of the products these firms make (and sometimes strive mightily to un-make), the plot twists can be dizzying, and the side effects might prove downright hazardous to the health of our IT operations and much more.

The most opaque of these struggles is the duel swirling around Linux, the open-source alternative to proprietary operating systems. You’ll find the half dozen most recent episodes of this melodrama recounted in our Front Page story.

Because the stakes are so high for those schools and colleges that already use or are thinking about using Linux, this account is of major significance. The outcome will go a long way in determining whether competition will flower or fade when it comes to core software solutions.

But this Linux fight is only one symptom of a larger mania gripping some of our most important technology titans just now. As in the days of the Medicis and Borgias, the warfare is within a relatively small group, waged mainly among individuals well known to one another. This familiarity seems to breed spite and malevolence.

Consider the battle raging between Oracle’s Larry Ellison and his former employee Craig Conway, now CEO of PeopleSoft. These men go way back. Ellison and Conway, Reuters reported, are like brothers—Cain and Abel.

In the brutal enterprise-software market, Oracle has managed to keep just ahead of PeopleSoft as they both chase after the market leader, the German firm SAP. Then PeopleSoft announced plans to buy rival company J.D. Edwards for $1.6 billion, a move that reportedly would vault PeopleSoft ahead of Oracle in market share. Ellison spun around and launched a hostile takeover run on PeopleSoft, circumventing Conway and going straight to the PeopleSoft board with a cool $5.1 billion takeover bid.

Conway immediately urged the board to reject the offer, but Ellison’s move, at minimum, shoots Conway’s hopes of reaping a publicity bonanza from the possible J.D. Edwards merger. Oracle’s move fairly blew PeopleSoft’s acquisition plans off the business pages.

In the end, Conway might well succeed in thwarting Ellison’s takeover gambit, however, because PeopleSoft—in a move Lucrezia and Cesare surely would have approved of—reportedly had the foresight to equip itself with a “poison pill” designed to cause fatal financial consequences for any firm attempting to swallow it.

Even the ostensibly happy union that would result from the pending acquisition of Handspring by Palm Solutions Group for $168 million in stock might have a dark side. It’s a situation that should resonate with parents of the so-called Boomerang Generation—those 20-something children who hurl themselves out of the family nest, fly straight into an economic brick wall, and twirl right back home to roost with Mommy and/or Daddy once again.

Jeff Hawkins, regarded by many as the father of handheld computing, left Palm in a huff in 1998 to form rival Handspring. Now, if the acquisition goes through, Hawkins will be right back at the Palm Solutions Group, this time as Chief Technology Officer of the merged company. Bygones, the PR people say, are long gone. We’ll see.

Then, there’s Corel, the Canadian firm known for Corel Draw and its acquisition of WordPerfect. Vector Capital, a San Francisco-based venture capital firm, has offered $97.6 million in stock for the Ottawa software company. The intrigue here involves the fact that Vector already is Corel’s largest shareholder. Corel says it has tentatively accepted Vector’s bid, but remains open to better offers from others.

What worries me about all this is certainly not the fate of the high-priced CEOs. Nor is it the stockholders whose investments are at risk. I worry about the distraction. Mergers and acquisitions consume the employees of these firms. Instead of innovation and imagination, you get self-preservation and resume preparation.

The princes of Florence wasted too much time on intrigue and deceit. But at least the Renaissance gave us Michelangelo, Raphael, and Leonardo da Vinci. Technology today holds promise the likes of which no age has ever known, as Ray Kurzweil so eloquently reminds us in his essay, “The End of Handicaps,” on page 40.

But progress is not inevitable. It takes research and development, dedication to improvement, and clear concentration. Right now, for many of the leading technology companies, those seem to be the farthest things from their minds.

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