Linux lights up enterprise; concerns loom

InfoWorld |  Operating Systems

The message was clear at last week's LinuxWorld Expo in New York: The Penguin is ready for prime time. With the freshly minted Version 2.4 of the Linux kernel available, vendors showed off the latest advances in open-source computing as industry leaders expressed their confidence in Linux as a mission-critical operating system.

"Linux is coming of age, and what's the next frontier? We think it's the datacenter," said Will Swope, general manager of Intel Corp.'s solutions enabling group, in Santa Clara, Calif.

And yet despite the big-name hoopla, lingering doubts remain about the long-term viability of some key Linux players.

Much of that doubt swirls around whether top Linux operating system distributors can build a business model that consistently generates revenue.

Many of these companies, such as Red Hat Inc., Caldera Systems Inc., and others, have centered their financial hopes on either giving away the operating system or selling it cheaply and making money from product services and support.

One or two distributors have generated added revenue from service and support, but the vast majority has failed to nail down lucrative service contracts corporate accounts, according to observers.

Most users who have adopted Linux on server and desktop systems prefer getting support from business associates and friends in the Linux community.

"I could never understand why so many thought they could build a business model around services and support," said Derek Burney, president and CEO of Corel Corp., in Ottawa. Last month Corel announced it was selling off its Linux operating systems business but would continue investing in its Linux versions of WordPerfect.

"We have Linux stuff deployed side by side with Windows and other proprietary platforms, but if I have an integration issue to be addressed with all that, I'll call in one of the other vendors to come in, not the Linux [OS] guys," said Bill Thompson, senior systems analyst at a large bank in New York.

Some Linux-based OS vendors hope to generate more revenue by bundling their product with another company's hardware or software. IBM Corp. bundles its industrial-strength MQSeries and CICS middleware applications with its distributions of Linux; Dell Computer Corp. is offering preconfigured servers that include Red Hat Linux along with Oracle software.

Although it is still too early to tell, Red Hat stands to earn more from shipping its Linux OS with high-volume Dell hardware, rather than on its own as a purchase option, most observers agree.

Similarly, IBM late last year signed deals with a few key Linux distributors, including Red Hat, to bundle several of Big Blue's Linux-compatible products. However, not enough of a track record has been established to determine if those deals are directly generating significantly more money for either IBM or the Linux distributors.

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