January 22, 2003 11:02 AM PST

Linux brings in big bucks

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IBM: Linux investment nearly recouped

January 29, 2002
NEW YORK--IBM and Hewlett-Packard garnered billions of dollars in revenue from Linux-related products in 2002, the companies said this week.

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HP said Tuesday that it had $2 billion in Linux-related revenue in 2002. Wednesday, the opening day of the LinuxWorld Conference and Expo in New York, IBM said it had raked in $1.5 billion in Linux-related revenue.

In addition, IBM spokeswoman Willow Christie said IBM's Linux effort was profitable. That's a change from last year, when Big Blue said it hadn't quite recouped its 2001 Linux investment of $1 billion.

The figures highlight the fact that although Linux can be obtained for free, there is money to be made from the operating system. IBM and HP both sell servers running Linux as well as software and services.

"Three and a half billion dollars in revenue--not bad for a free operating system," said James Governor, an analyst at research firm Redmonk. "It is clear that there are real, high-dollar Linux transformations going on" as companies switch from more expensive technology to Linux systems.

Microsoft last week reiterated its position that Linux's similarity to Unix means it's not, for the most part, replacing Windows systems. The company said, though, that it had hoped to woo those customers to Windows.

"From an IBM perspective, the economic war with Microsoft is really getting into gear now," Governor said.

Market-share research firm IDC said in a report this month that for the first three quarters of 2002, HP had about 31 percent of the $1.4 billion market in Linux servers, with Dell in second place with 21 percent, and IBM in third with 17 percent.


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