January 10, 2000 3:20 PM PST

IBM plans pressure Linux companies

IBM's increasing fondness for Linux raises the prospect that its vast services business could encroach on the turf of smaller Linux companies.

Big Blue today beefed up its plans to embrace Linux on all four of its server designs, improving how well Linux and IBM's AIX operating system work together and contributing more of IBM's own software to the collective Linux development effort.

Despite IBM's sensitivity toward Linux companies, the company acknowledges it will compete with smaller players such as Red Hat, VA Linux Systems and Linuxcare, which want to make money by charging for services such as installing, supporting, or tuning Linux systems.

"There's some competition," said Tilak Agerwala, vice president for Unix marketing and product management at IBM, referring to the Linux work of IBM's services division.

Though IBM has technical support deals with Linux sellers Red Hat, SuSE, TurboLinux and Caldera Systems as well as support shop Linuxcare, those relationships might not last forever. "Whenever they decide there's a lot of money in this, and we can get our own staff up to speed on Linux, then (IBM) might say, 'We'll just do it ourselves,'" said Aberdeen Group analyst Bill Claybrook. "I'm sure that (IBM is) planning on making money from services with Linux."

Linux, an open-source clone of the Unix operating system, competes with Microsoft Windows as well as several varieties of Unix. In the last year and a half, support by hardware and software companies and frenzied initial public offerings have helped to raise Linux from a hobby to an unavoidable feature of the computing landscape.

Though IBM's increased muscle does raise concerns for existing Linux companies, analysts also see Linux firms to benefit from the stronger position in the computing industry IBM will help bring.

"I think it's a good thing for them that IBM is putting all their platforms on Linux, because it has the potential to expand the Linux market," said Giga Information Group analyst Stacey Quandt.

Santa Cruz Operation, a longtime seller of Unix, has thrown some of its weight behind Linux services, investing in both Caldera Systems and TurboLinux.

Red Hat is undeterred by IBM's bolder Linux plans, noting IBM's investment in Red Hat.

"Regarding today's IBM news, we couldn't be more enthusiastic. IBM has long been a strategic partner of Red Hat, and their continued involvement adds validity and strength to the space," Red Hat spokeswoman Melissa London said.

But Claybrook predicted consolidation in the number of Linux companies. "Not all of them are going to be there at the end."

Curiously, Sun Microsystems and its Java software could be another victim of IBM's Linux strategy.

IBM has been one of the strongest backers of Java, which lets software run on a multitude of different computers, including all four of IBM's major server lines. But IBM and Sun have been at odds because of Sun's cancellation of plans to release control over the future of Java.

And now it appears that Linux has stepped in to fill some of the role Java once occupied.

"We're Linux-enabling all our servers," said Agerwala. Linux fits in with the list of Internet technologies such as XML, TCP/IP and HTTP that run on lots of different computers, he said.

"We believe the long-term growth of the Internet is about common application platforms that can harness leading-edge technologies and simplify customers' choices. We believe Linux will develop into that type of common platform," said Sam Palmisano, head of IBM's computer products group, in a memo Friday.

IBM used Linux as an example to say Sun and Microsoft, traditionally archrivals, are actually similar. By adopting Linux, with its open development process, IBM will be "on a side other than Sun and Microsoft, which are opposed to open standards and which favor closed, proprietary operating systems," IBM said in a statement.

The plan to more fervently adopt Linux is "the first important step in our vision to revitalize IBM's server business," Palmisano wrote.

Irving Wladawky-Berger, head of the now-closed Internet Division, will lead IBM's Linux strategy and will report to Palmisano.

Palmisano's endorsement of the Linux plan is significant, Quandt said. "I think it's particularly interesting that Palmisano is involved in this particular restructuring," she said. "Some people have commented that Palmisano is the next person in line after Lou Gerstener," IBM's current chief executive.

IBM's move also should give pause to Microsoft, she said. "It's a David and Goliath story. People generally like stories about a challenger to Microsoft's hegemony."

 

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