IBM: Linux investment nearly recouped
By Stephen
Shankland
Staff Writer, CNET News.com
January 29, 2002, 9:00 PM PT
http://news.com.com/2100-1001-825723.html
NEW YORK--IBM nearly recouped the $1 billion it said it invested in the
Linux operating system in 2001, the head of IBM's four server groups is
expected to announce Wednesday.
Big Blue said more than a year ago that it would invest $1
billion in Linux--spending money on tasks
such as bringing the Unix clone to its full line of servers, bringing its
broad software portfolio to Linux, training its services and consulting
personnel, and placing advertisements such as full-page ads in major daily
newspapers.
"We've recouped most of it in the first year in sales of software
and systems," Bill Zeitler, head of the server group, said in an
interview before his keynote speech Wednesday at the LinuxWorld
Conference and Expo. "We think it was
money well spent. Almost all of it, we got back."
Zeitler declined to detail how much IBM spent on what initiatives, how
much revenue each segment produced, or how much the company plans to spend
in 2002. However, he did say the company increased its target revenue from
Linux operations by 50 percent over the 2001 level.
But IBM's figures should be taken with a grain of salt, warns IDC
analyst Dan Kusnetzky, who has tracked Linux for years as it rode a wave
of enthusiasm in 1998 and 1999 that crashed in 2000 and 2001.
"I think they're including investments they made in other
operating systems as well as software," said Kusnetzky, noting that
IBM unified the groups that work on Linux, IBM's AIX operating system and Caldera
International's UnixWare product. "They
were setting the situation up so they could claim they were investing a
very large amount of money. They don't have to break out what portion of
the investment went to each operating system they are supporting."
But Kusnetzky gives IBM credit for the approach. "It shows a
well-thought-out marketing strategy. They are taking more advantage of
Linux and the open-source movement than any of their competitors," he
said.
Indeed, IBM's support of Linux has succeeded in drowning out rival
server companies with substantial support backing for Linux.
"I would say IBM has probably placed itself in the first
tier," Kusnetzky said. "Hewlett-Packard is probably second along
with SGI. Then there's probably Compaq after that. Sun has done a lot for
the open-source community, but they somehow always say something in a way
that would offend the open-source community."
IBM unquestionably has heavy support for Linux, most recently
exemplified by its Linux-only
mainframe that will go on sale in March
after more than two
years of effort getting the software working
on the high-end, old-guard servers.
IBM has lured some prestigious customers along the way. E*Trade is
moving to a Linux-only operation, starting with IBM Intel servers that
replace Sun Microsystems systems, Zeitler said. Digital-animation studio
Pixar is replacing the SGI machines used to animate "Toy Story
2" and "Monsters, Inc.," with IBM Linux workstations,
Zeitler said.
HP also has been working to woo similar customers and will announce
more than one in the near future, said Terry Brown, HP's manager of
entertainment industry solutions. "We've been developing some key
technology for this industry for more than two years now," he said.
"It's good to see that other manufacturers are entering the
market."
Linux forms the basis of a major push at IBM called "grid
computing," servers and storage systems
linked into a seamless network of computing power. Higher-level software
on the grid makes sure the right computing power is allocated to the right
computer users.
IBM's grid push includes Linux and is built atop software protocols
it's developing with the Globus
Project, which shares the nonproprietary
open-source development philosophy at the heart of Linux.
Open initiatives such as grid computing and Linux will transform
business computing by breaking the lock that companies held on customers
who weren't able to easily switch to another's hardware or software. That
old order includes IBM's mainframes,
Zeitler plans to say in the keynote address.
IBM has thus far convinced mostly academia and research-heavy businesses
to buy into grid computing, but analysts believe grids will spread in use
and that Big Blue will benefit accordingly.
"Grid computing moves value to higher levels of sophistication
where IBM can make money on software, services and more complex
hardware," said Merrill
Lynch analyst Steve Milunovich in a report
Monday. "Grid computing is an example of IBM planning for where the
puck is going."
Linux has overcome obstacles, but not all, Zeitler said. "Earlier
in the year, the biggest concern I would get when calling a financial
institution is, 'Who's going to support this?' We now have a good solid
set of people we can point to," he said.
"The next thing people would say is, 'Show me a company...that's
done this.' (Now) we've got 120 references."
But the Linux job isn't done. "I think the real challenge now is
one of maturity in the market," he said.
Last updated:
January 31, 2002
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