I am constantly amused at how people try to apply the metrics of proprietary software to open source.
This can even happen within open source companies, as when Roy Russo of JBOSS writes on his blog that open source inherently leads to monopoly.
In fact every business model leads to monopoly, or something like it. This "climax state" can be disrupted by the monopolist getting lazy, or the government stepping in, but in a win-lose world someone, in the end, wins.
C|Net's own Matt Asay thinks this is bound to happen more quickly with open source. "What new Linux vendor (or, rather, its would-be investors) wants to compete with Red Hat?" he asks.
In doing this Xandros is not aiming squarely at Red Hat's niche, enterprise Linux. They are placing a bet on the small business market.
We may ask what is Xandros acquiring? You don't acquire the source code of an open source business. You acquire its book of business, its personnel and (perhaps) its liabilities.
My point is that open source, by its nature, changes a lot of rules. It changes the nature of competition, the nature of acquisition. It does not overthrow these rules, it twists them into new forms.
Be alert to the changes, and don't assume the old rules apply in the exact same way to the new world.