Linux Appeal Grows Despite Obstacles

On its tenth anniversay, Linux continues to push into the enterprise

On its tenth anniversary, Linux continues to push its way into the enterprise at a time when few products or technologies can say the same. The operating system's initial price tag, combined with its slowly growing acceptance as a serious contender to Unix, are helping. On the other hand, the economy isn't helping—few new projects are being undertaken, leaving little room for inroads. And lingering doubts remain about Linux's readiness for enterprise deployment.

As an open source product, Linux has a price tag that's hard to beat. Download it from any one of the many Linux developers (Red Hat, Debian, Caldera, SuSE) and it's a freebie. Buy it and you pay mostly for the manuals.

But acquisition costs are, at best, 10 to 15 percent of the total cost of ownership. That means corporations contemplating Linux need to figure in more than just price as the purchase equation. But that beginning price tag is proving to be very appealing these days.

"I'd say that the [economic] downturn has been very beneficial to us, because it's forcing CIOs to completely re-evaluate their existing systems," says Michael Tiemann, chief technology officer for Red Hat Inc. "The reality is [that] with the way budgets are going, no one can maintain their job with the status quo." He also thinks "it's a little sad" that it's taken an economic downturn to force companies to reconsider Linux and other open source products.

IAM Consulting in New York has also noticed that more customers, large and small, are looking at Linux now because it's cheap. "I think that's the key starting point, especially as budgets get tight," says Jeff Altman, director of networking and security technologies for IAM.

Smaller customers are using only Linux, specifically because of costs, while larger corporations are using it on a department-by-department basis, explains Altman. It's also a matter of what's being done. Because it owes its heritage to Internet-based development, Linux is strongest in the area of Internet-oriented functions like Web serving.

But that's just a steppingstone, says Altman. "As e-commerce, mail services and smaller database projects are run on Linux and as companies become more comfortable with it and more people become experienced with it, you'll see Linux being used more and more," he explains.

In the case of Morgan Stanley Co., based in New York City, the company is standardizing on Linux because it decided to standardize on the Intel platform, and Linux was the best operating system for the architecture, according to Phil Moore, executive director, enterprise application infrastructure group at Morgan Stanley.

"Commodity hardware is what drove it," he says. "The No. 2 reason had to be the popularity of Linux and the maturity of Linux. It really is mature enough for the type of environment that we have. A lot of vendors are supporting Linux, so we feel it's reached critical mass in that regard. The list of things we can't get is shrinking.

"Linux has stayed in our environment and will make headway in our environment because it is the operating system of choice for migrating to a commodity hardware platform," he says. In three to five years, his department expects to have migrated 80 percent of its applications from Solaris to Linux.

A growing number of CIOs seem to agree. Research firm International Data Corp. expects that Linux will account for 32 percent of server installations in 2002, up from 27 percent in 2001. It was often predicted a few years ago that Microsoft Corp.'s Windows NT/2000/XP would be in a duel to the death with Linux for corporate attention. Instead, IDC predicts continued strong growth for Microsoft as well, with 47 percent of servers being XP-based in 2002, up from 41 percent in 2001.

The real loser, so far anyway, is the entrenched Unix operating system that Linux was once thought too puny to compete against. IDC says new Unix server deployments will shrink from 14 percent in 2001 to 10 percent in 2002. The inroads Linux is making come at the expense of the big Unix vendors, not Microsoft. Sun Microsystems in particular was hit hard in the third calendar quarter of 2001, with revenues falling 43 percent from the same quarter in 2000 to $2.861 billion and a net loss for the first quarter of $158 million.

Linux is a culprit here, but it's not alone, says Stacy Quandt, analyst with Giga Information Group. "To a large degree, Sun's hurt is from Linux and being driven by IBM," she notes. "IBM's emphasis on server consolidation and porting applications to Linux is having an impact on Sun."

IBM: Linux Advocate
IBM, the company that perfected the "Not Invented Here" mindset long before Bill Gates got his first computer, has become almost as fanatical about Linux as the crowd. It has ported Linux to all of its hardware systems, up to the System/390 mainframes; it has also ported most of its AlphaWorks development tools to Linux and is giving them away.

In addition, IBM has more than 2,000 programmers working on porting its other software products—including WebSphere—to Linux. The company plans to spend $100 million this year to develop training, consulting and supporting services on Linux.

So far, Linux accounts for just $350 million in sales for IBM, a small fraction of IBM's $14 billion in annual revenue. It's growing quickly, however, and much of that revenue will be in the area of services, the most profitable area of IBM.

So why does IBM now have the Linux religion? "We think it's a unifying force for us and Linux is becoming a scalable, reliable OS," explains John Reed, director of e-server product marketing and management for IBM. "It's an application flexibility statement we want to make to our customers, and Linux is one of those enablers, like Java, XML and other open standards we've championed."

Linux is getting the attention of IT managers and they're asking about it, he said, but IBM still has to make the pitch. That includes examining total cost of ownership, since initial acquisition costs are a small part of the total cost of ownership. "You gotta look at more than just the initial purchase price," says Reed. "One of those is skills, one of those is ease of use and ease of management. With our enterprise heritage we can bring down those management tools and bring up the cost of efficiency and skills."

Morgan Stanley's Moore calls IBM's shift in mindset "stunning." He's grateful for it because hiring skilled mainframe professionals has become increasingly difficult. By moving systems to Linux, the company opens itself up to a whole new set of skilled IT professionals. "No one trains for [mainframe operating system skills] any more and the good guys are in their 40s and 50s," he notes. "If we have to stick with an S/390, we don't want to have to stick with OS/390 for 20 years."

Having a common operating system across all platforms means improved performance, Moore says. For example, data on an AS/400 system needn't be retrieved and then sent to a Linux box for processing—it can all be done under Linux.

Whether Linux saves people money is still unclear. In its latest quarterly fiscal filing, online retailer said switching to Linux helped it shave technology expenses by about 25 percent, from $71 million to $54 million, for the quarter.

But a recent convert to Linux, fashion designer Tommy Hilfiger Corp., says it hasn't seen a lot of savings yet from its jump to Linux. Tommy Hilfiger deployed IBM eServers running Linux, DB2 Universal Database, Java and other software to create a b-to-b portal (

"The initial cost was much cheaper than going with Solaris or these huge [Unix] boxes we didn't need," says Brent Findon, vice president of systems development for Hilfiger, in Dayton, N.J. "But once you get over the initial cost savings, with ongoing costs, you're probably not saving too much because the maintenance is pretty expensive and we have to train our people."

Hilfiger isn't hiring specific Linux experts, it's hiring Unix staff who can also work on its back-end HP 9000 servers, and while open source software may be cheap, there's no such thing as open source personnel.

IAM's Altman thinks Linux's low-to-nothing cost doesn't mean much. "When you're talking about a $10 million project, $100,000 in licenses is peanuts to the cost of the project," he says.

Linux may face challenges in the current economic climate simply because there are fewer projects being done—meaning fewer opportunities to try a new tool, including a new operating system. But Morgan Stanley's Moore thinks the economic situation is good for Linux. "It means when you're presenting a proposal for a new project, you have to look at a number of things, technical feasibility and cost," he says. "[Because] cost is being looked at a lot closer than it was two years ago, when we can demonstrate that the Linux-on-Intel effort has a tremendous long-term cost savings, that strengthens the Linux cost."

Keeping the Momentum
It's not easy for open source projects, Linux included, to keep their momentum at a time of economic uncertainty, and the events in New York and Washington last September have only made a bad situation worse.

Things certainly aren't all rosy for Linux. Some large IT shops remain unconvinced of its viability. In a November 2001 survey of 100 IT managers from various industries, Goldman, Sachs & Co. found that 55 percent of IT managers expect their spending for 2002 will be flat or down from 2001, with only 17 percent expecting their budgets to grow.

Money that does get allocated will be directed toward highly practical areas, those whose projects carry at least a perceived sense of urgency. Windows 2000/XP Pro and network security software ranked at the top of the managers' spending priority lists while mainframes, supply chain management software and Linux servers ranked near the bottom. A full 65 percent of the surveyed managers said they had no plans to use Linux in 2002.

A shaky economy has taken its toll on companies trying to make a go at open source. After bombing out in the hardware business, VA Linux has changed its name to VA Software, and is focusing on proprietary enhancements for its SourceForge service for managing open source projects.

Other companies are losing faith in the open source concept of distributing source code with their product. Sistina, developer of a file system that multiple computers can share, gave up the notion of a free, open source product with revenues based on services and support, and released a closed-source license for the 4.2 product in August 2001.

Likewise, Great Bridge had hoped to sell services for its open-source PostgreSQL database program, but that failed, so the company shifted toward closed products, which also failed, and the company closed up shop in September.

As companies are going under, if there's an OS product sponsored by a single company, that product suffers, but that's true for any project. And open source projects have one advantage. If a company dies, someone can pick up the project and continue, points out one consultant.

"No one owns Linux. The fact that a company that markets it goes under doesn't mean Linux is dead," says Altman.

The Next Challenge
Born and weaned on the Internet, Linux has seen its greatest successes in Internet-oriented functions. It found its way into more than one large company simply because a Web server or file and print server was needed for a corporate intranet. An enterprising developer dug out a retired Pentium II with 64MB of memory, put Linux on it, and it served its purpose perfectly.

The trick now is to move beyond that. Can Linux push into areas like HR, financials, transaction services, and other 24x7 functions that can't afford to be down—and do it all on PC hardware?

IBM's solution has been to put Linux on its reliable big iron. That doesn't mean people are actually using a System/390 to run an OS that can run on a 32MB PC. "Linux today is predominantly in edge-of-network devices," says IBM's Reed. He hasn't heard of customers re-writing their core business applications for Linux, but Linux is supplementing the existing systems. "Where people are using it is to develop extensions from core business logic out to Java and XML to run it in a Web fashion."

That's exactly what Hilfiger is doing. "We have no plans to move Linux to our back-end systems," explains Findon. "Our back-end systems are so entrenched that I don't know if it makes sense. We have no good reason to change unless cost becomes a huge factor."

IBM's massive porting effort will not be enough for Linux—it still needs more development and application availability. It's still plagued by a dearth of client-side applications. Only one professional developer tool is available, Borland Software Corp.'s Kylix, a Linux version of the Delphi tool. WebGain Inc. is finally getting into the game with the release of VisualCafe for Linux early this year.

Red Hat's newest mission for Linux is centralized management. Even though Computer Associates Inc.'s Unicenter and IBM's Tivoli management products are available on Linux, it needs to be integrated into centralized management systems to provide user policies, software management and to provide users with software updates. In other words, it needs all of the features found now in Windows NT/2000 with Active Directory and Systems Management Server.

Another glaring problem has been a lack of Java support on Linux. That's due to the open source community being at near civil war with Sun over its control over Java. "Sun's control of Java has been incompatible with the open source philosophy," says Red Hat's Tiemann. "Sun believes it has to maintain total control of Java and many people believe that as long as Sun maintains that position, it will compromise any major Java solution." The end result is a lot of Linux programmers sticking to C/C++ and staying away from Java.

Moore isn't too happy with Sun either. "They control the license of Java but that's not open," he explains. "Open means if I want to, I can make modifications of their code and give it away to others. You can't do that, and that's a large reason why they haven't been embraced by the open source community."

Then, of course, there's Microsoft, which may start to get bolder in attacking Linux now that it's managed to avoid the wrath of the Department of Justice. The company has taken swipes at the GNU General Public License (GPL), under which most open source projects are released. "Microsoft has taken a shot at Linux by attacking GPL, and some Windows users actually believe it," says Quandt.

But by and large, it seems Linux is continuing its growth, gradually moving from edge/Internet servers where it got its beginnings, and from the advocates and die-hard flag-wavers, to data center services run by IT professionals who see it as a tool, not a religion.