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Be revenues rise – but profits don't much

We'd have gotten away with it if it wasn't for those pesky Linux kids

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Alternative OS developer Be saw its revenue show its latest quarter-on-quarter rise, yesterday, when it reported its Q3 1999 figures. Alas, though, as revenues rise, Be continues to lose money overall. This time round, Be lost $4.5 million, compared to a slightly greater $4.7 million last quarter and $2.4 million for the same period last year. Factor in various charges due to "the amortisation of deferred compensation and preferred stock accretion", Be's latest loss rises to $6.1 million, compared to $6.6 million and $3.6 million for Q2 99 and Q3 98, respectively. Revenues for Q3 99 -- Be's second quarter as a public company -- totalled $775,000, up from Q2 99's $537,000 and Q3 98's $226,000. Be's increased revenue is derived from sales of BeOS, which have grown as the company has begun to pump the OS through new supply channels, such as Dell's online store. Increasing disenchantment with Windows, helped by some users' concern over the complexity of Linux, should boost Be's sales here, but are either of these really enough to build a successful business? We think not. Linux may be complex to some users, but it's getting easier to install, set-up and use all the time and, frankly, gets far more headlines than the BeOS does. Want proof? Red Hat's most recent revenues were $7.2 million -- just under ten times Be's. Be is making valiant attempts to get software developers to port over applications, but by and large the BeOS has a shortage of solid, mainstream apps. Roy Graham, the company's VP for sales and marketing, said in the results release: "To enhance our future product offering, we teamed with RealNetworks to bring the RealPlayer G2 to BeOS users, with Roland to bring USB audio support to BeOS and with Monolith Productions to develop Shogo: Mobile Armor Division, an interactive computer game." All good stuff, to be sure, but is that the best the company can do? Perhaps, though, that doesn't matter much to Be, which appears to be increasingly targetting the Internet appliance and embedded markets. So far, Be has little to show for its work here, but Microworkz' iToaster and a prototype BeOS-based appliance. If Be is to move rather more quickly toward profitability than it currently is, it really needs to get some solid appliance design wins, and step up its marketing in the face of the Linux onslaught. ®

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