Linux orbit software

Canadian corporations continue to shun Linux as a platform for their enterprise environments. Corel couldn't sway the masses, can IBM?

Despite considerable hype and investment in marketing and support for Linux, it seems Canadian corporations are still wary of making the move to open source for their enterprise environments.

Most vendors agree adoption has been slow, but vow they are in the Linux game for the long-haul. The challenge they face is to provide a compelling reason to customers -- and their partners -- to consider Linux a viable alternative.

"At the customer level, even those with 100 seats need stability and if what they've got is stable, there is always the question: 'Why would they change?' said Gary Isaacs, director of partners with IBM Canada. "The same challenge exists within the partner community -- they have a business and it's working. They have what their customers are asking for; why would they make this investment in a new area that, quite frankly, may not pay off from their perspective?"

lsaacs said IBM is trying to encourage partners by saying: "You have to have skills for your current business, but you also have to be getting ready for what's. coming in the future. And if it's going to be Linux, you should be investing now,"

However, a recent research paper from Gartner Group shows movement by the large vendors to support Linux has provided a hefty boost to the acceptance of open source software in corporate environments. With the major server vendors such as Hewlett-Packard, Compaq, IBM and. Dell all throwing their weight behind Linux, it seems they're betting it will deliver a revenue stream for the future.

And when IBM announced earlier this year it was investing $1 billion and .dedicating 1,500 people to Linux alone, Gartner said the move by Big Blue would do great things to boost acceptance of source software.

"I would assume users feel more assured that IBM stands behind Linux. So IBM's thrust here, and its support of Linux, is a major factor in legitimizing Linux," said George Weiss, vice-president and research director with Stamford-Conn. based Gartner Group.

All this embracing of Linux is simply about vendors shoring up their position in' the market, should Linux pick up speed in the future, said Weiss.

"I'd be surprised if anyone is making money on Linux other than selling the hardware that supports the OS," he said. "It looks more like a defensive action on the part of the vendor community to protect themselves from losing business to other vendors with the hopes that Linux will become a big market opportunity in the future."

Numbers from IDC Canada indicate that gamble may pay off. The five-year compound annual growth rate for revenues from Linux between 2000 and 2005 is estimated at 41 per cent, while total market revenues are expected to grow by just seven per cent. Unit shipments of Linux are expected to grow by 33 per cent.

And in the last two years, adoption of Linux grew significantly according to IDC. In the Linux server market, the number of units shipping with Linux pre-loaded with one of the big Linux distributors, such as Red Hat, have grown significantly. Revenue from server sales running Linux was $3 million two years ago. That figure jumped to $51 million in 2000.

But Alan Freedman, research manager, servers and storage with Toronto-based IDC Canada, notes that Linux was still a tiny piece of the $2.1 billion server market last year.

"They're going into a lot of low-end environments where people are concerned about price and where people are feeling disenfranchised with Windows," said Freedman. "They're also going into Internet databases or service providers where they fill the workloads on the low-end - in the Web serving and caching, security and load balancing areas. So they will be the front-end server in a tiered Internet infrastructure, -- that's where the volumesare."

According to Freedman, Linux adoption rates are poised to increase. The ability to scale and play across clustered systems and multiple processors, thereby gaining the credibility of working with client workloads.

"We're going to see the units, and more likely the revenues grow, because right now there are unit shipments out there, but very low dollars. So as Linux gains the ability to work in the higher end applications, then we'll see the revenues jump as well."

When you consider that Linux unit shipments (all vendors) amounted to 400 in 1999 and just over 7,600 in 2000, the growth rate sounds impressive. But compared to 1999's total server shipments of 88,700 and 92,800 in 2000, Linux still has a long way to go before it can be considered a major player. But continued support from the big vendors will push interest in Linux said Freedman.

"When IBM threw its name behind Linux, that was a huge jump. When Dell came out and said it's one of their three strategic operating systems, really gives it a lot of credence," he said.

But those betting big on Linux are being conservative in their expectations. While huge dollars have been poured into the marketing and development, the return on investment has been slow to materialize.

"I think anybody you would talk to, if they're being realistic, would say Linux is at the very early stages with most customers," said Isaacs. "We're starting to see it with some of our customers and not always with centralized IT departments, but we are seeing some departments deploying Linux on some of their servers. We think it's a big opportunity going into the future, but it's at the early adoption stages."

The experience has been similar for Compaq and Hewlett-Packard.

"Where we have been having wins with Linux is in the performance computing marketplace," said Ira Weiss, Alpha server marketing manager with Compaq Canada. "I've been seeing people doing it for all kinds of different things - deploying infrastructure for doing Web services and for other kinds of open source applications. I can't say that corporate Canada or corporate America is really truly jumping on the Linux bandwagon. I think there are lots of companies out there that are doing things with it and I think as they see more and more of it, the adoption will start increasing."

Numbers are hard to come by when you ask vendors what portion of revenue they are realizing from Linux, but the message seems to be that they are investing for the future.

In its report, Gartner said Compaq and Deli indicate 10 to 12 per cent of their units now ship with Linux, although it is unknown the revenue generated.

"I'd say it is still a reasonably small portion of our total revenue - I don't even know that I can put a dollar figure on it," said Compaq's Weiss. "I don't know that we're going to start running any programs to drive demand for Linux systems, we're really going to support the growing group of customers that are using it and implementing it."

Providing support and services seems to be key.

For customers curious about migrating to Linux, many want one number to call before they'll consider a long-term commitment, said Steve Shaw solutions marketing manager for Mississauga, Ont.-based Hewlett-Packard Canada.

HP supports five of the main Linux distributions and last year launched a Linux division - the Linux Systems Operations, a entity within HP dedicated solely to Linux development.

"Say a technical workstation is sold with Red Hat on it - the customer can still get support through HP," he said. "We are supporting a number of the distributions like Red Hat and Debian and others like SuSE, so we have our support organization that will support Linux through our response centres and through our support teams through different distributions," he said.

According to IDC, Linux generates the most inquiries from customers shopping the server market these days -- something Shaw confirmed.

"I do know that the customers I am personally meeting with are asking about Linux and the supportability, what they can do with HP - but they're not precluding any operating systems as well. We're seeing pockets of it coming in, although I'm not seeing a huge implementation of it to run people's businesses; they're still looking for a more mature operating system to actually be the key OS for their environment."

But for Linux to reach greater acceptance, analysts have insisted that Linux needs more professional applications available to the end user, and developers need a standardized environment for creating applications faster.

"I think some of the things that are keeping it from full adoption is that the critical mass companies haven't seen any compelling reason to move yet.

And there's not a whole lot of desktop or mainstream desktop applications yet," said John Fisher, president of Borland Canada.

Borland offers Kylix, a development tool created to speed the creation of Linux applications.