High tech is not an arena rich in historical irony, but it has its moments. One came last year, when Microsoft CEO Steve Ballmer told analysts that Linux, the (potentially) free software that continues to attract the interest of business customers, has "the characteristics of Communism that people love so very, very much about it." At roughly the same time, IBM, a company generally not known for its Marxist worldview, threw its considerable weight behind Linux, dedicating $1 billion to the software's development and pledging to invest more than $300 million in Linux services during the next three years. And defense witnesses in Microsoft's recent antitrust trial continually cited Linux as evidence of a robust, competitive marketplace--hardly a Communist ideal. (For the record, wasn't it Microsoft's distribution of free copies of Internet Explorer that sparked cries of market abuse in the first place?)
No less ironic is that IBM, the company credited with inventing and using FUD (fear, uncertainty, and doubt) as a means of fending off the threat of new technology, may help dissolve the FUD that Microsoft and other firms have thrown around Linux, the operating system software that can be downloaded for free from various Internet sites. Linux may not carry the high price tag of other operating systems, but IBM's embrace is purely pragmatic. As Linux gains wider acceptance, it creates a growing market for hardware and services. IBM, therefore, not only trumpets the availability of its own Linux-ready hardware, but also makes frequent mention of the growing number of software applications that can run on Linux machines. In June, the company counted 2,300 such applications--an increase of 30 percent from just three months earlier. "A mature operating system would have 10,000 applications," admits Daniel D. Frye, director of IBM's Linux Technology Center, in Beaverton, Oregon, but those that are available, he notes, "are the big ones--like SAP and Lotus Notes."
A Question of Support
Linux has been lurking "around the edge of the enterprise" for years, notes Frye, handling file serving, messaging, and other IT plumbing jobs. But now it is moving into the mainstream applications that run Corporate America, and its overall market presence continues to grow.
As Linux becomes a viable platform for business applications, one key question for finance executives is whether a system praised for being free will exact a high price in the form of service and support. Computer geeks may be thrilled by the communal spirit of collaboration in the Linux world, but once a company has placed a crucial application, such as ERP (enterprise resource planning), on the Linux platform, decisions about how or whether to acquire adequate service and technical support become an important element of corporate risk management.
Microsoft, in fact, recently underscored the importance of support by using it as something of a stick to force corporate customers to enroll in ongoing maintenance contracts. Linux enthusiasts point out that open-source software offers relief from that sort of arm-twisting. But it does create a situation ripe for the marketing talents of IBM and other companies (Linux distributors Red Hat, Caldera, Mandrake, TurboLinux, and SuSE among them) that are eager to convince Corporate America that the combination of free software and paid support makes sense.
Kevin Thompson, CFO of Durham, North Carolina based Red Hat Inc., says that of the 15 million to 20 million copies of the company's Linux product in use today, most were downloaded or copied for free; only about 1.5 million were paid for. But those that did pay were usually corporate customers eager to obtain some level of support. Typically, Linux distributors include some form of installation support with a paid download or CD package of the Linux operating system, which costs anywhere from $40 to $80. Beyond that, corporate contracts of increasing complexity and cost are available from distributors or third parties. IBM, for example, offers 24-7 remote support via phone and Internet, as well as service specialists who can supplement internal staff on-site if needed. Premier support contracts often include performance guarantees that pledge to resolve problems within a specific time frame.
Despite the vast number of free Linux downloads, Thompson insists that "most corporations are not going to download Red Hat Linux for free. They are going to want to acquire technology from a company that will support it. My belief is that very few corporations using open- source technology on a widespread basis have downloaded it for free."
Red Hat, IBM, and others seeking a living from Linux are betting on Thompson's belief. But is he right? Linux users provide one another with virtual--and free--support via a host of online forums in much the same way that they share source code improvements. Combined with Linux's vaunted stability, that makes support a tough sell. "It actually has been mildly frustrating that so many people are unwilling to pay us for service and support because the damn thing never breaks," admits Frye.
Who Needs It?
At NHL.com, hockey fans can perform sophisticated searches for particular players and particular feats--the regular-season save percentage by New York Rangers goalie Mike Richter, for example. The Apache Web servers, database, and Web-site search capabilities that support those features are all running Linux that was downloaded for free--that is, without support--from Red Hat's site, says Peter DelGiacco, vice president of IT for the National Hockey League.
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