IBM looks to SMB sector for Linux love

Ahead of the Linuxworld Conference and Expo, which begins Tuesday in San Francisco, IBM Corp. is seeding the field with a collection of announcements that illustrate its momentum behind the open-source operating system. The company detailed Thursday new customers that have chosen to use Linux with its hardware and software. Nine customers being highlighted bring IBM's tally of Linux followers to more than 4,600, the company said.

What is notable about the latest batch of converts is that some come from the small and medium-sized business (SMB) sector, a segment known for typically using Windows servers to run basic business, productivity and accounting applications.

Despite popular belief, "Linux is being used quite heavily by small and medium-sized business," said Scott Handy, director of Linux software solutions for IBM. "We've been partnering with independent software vendors (ISVs) who call on the SMB market."

Through partnerships with ISVs, IBM has been able to convince customers that its Linux-based xSeries servers, along with supporting applications such as its DB2 database software, can make for a viable alternative to Windows. One IBM software partner, Accpac International Inc., a subsidiary of Computer Associates International Inc., makes its accounting software available for Linux, and led to IBM winning a customer relationship with Westport Rivers Winery, a small wine maker based in Westport, Massachusetts.

"Our initial search was for an accounting package that ran off of Linux," said Jamey Russell, IT manager and proprietor of family-owned Westport River Winery.

After some investigating, the company decided to go with Accpac's accounting software with DB2 on a server running Red Hat Inc.'s Linux operating system. Additionally, Westport River Winery migrated its Windows 2000 servers used for print and file serving and Web access to a Linux server, and has switched to Domino, the messaging software from IBM subsidiary Lotus Development Corp.

Russell calculated that the company will save about 3 percent to 5 percent on its IT budget over the next three years moving to its Linux configuration. "After that, our savings per year will be approximately 60 percent each year," Russell said.

"Our goal is, within the next year and a half, to become a Microsoft-free office," he said.

Westport River Winery said it plans to continue its migration to Linux in the next few months, when it plans to replace its Microsoft Office software with the open-source alternative OpenOffice. The switch has been seen as a positive one for Russell, who said he has toyed around with Linux since 1995. And he said it has been equally as smooth for the 20 Westport River Winery employees who access the system.

"Right now we're really using Linux on the back end, which most people don't see," Russell said. "It's been very transparent for most people."

A second IBM Linux customer coming out of the woodwork Thursday is independent record distribution company Satellite Records. The company of 100 employees, based in New York, is in the processes of moving its Web-based inventory management system to two Red Hat Linux servers from IBM, according to Steve Shapero, director of IT at Satellite Records.

The company has decided to move from a Windows server running Microsoft's Visual FoxPro database development environment to a Linux server running DB2. A second Linux server from IBM has been set up to run Apache 1.32, for the Satellite Records' Web operations. Aside from bringing its system into the 21st century, Shapero noted that the Linux alternative is saving the company from the pains of maintenance.

"For small companies that don't have big bucks for IT infrastructures, if you get a Linux server set up it's probably going to work for as long as you keep it plugged in, and you're probably not going to have to do too much to keep it going," Shapero said. "Our experience with Microsoft has been less than satisfactory."

The key to winning SMB customers will be making sure that the applications they use to run their key business functions are available for Linux, said Stacey Quandt, an industry analyst covering Linux and open source software for Giga Information Group Inc.

"The ISVs are a big part of the (operating system) ecosystem," Quandt said. "There's a lot of ISVs that IBM has been trying to pull into Linux to target SMBs."

Historically, Microsoft has been a leader in the SMB space because so many accounting and small-business service applications have been designed for Windows.

"I'd say the vast majority of people building applications for SMBs are doing it on our platform," said Peter Houston, senior director of Microsoft's Windows server product management group, who will be representing Microsoft next week at its Linuxworld booth.

And he says Microsoft isn't ignoring the sector one bit. "We're putting US$500 million into programs to help generate business application development for the small and medium-sized business channel," he said.

The SMB market is in stark contrast to many of the major customer wins IBM has announced in the past, which include major financial banking institutions as well as a recent win with T-Com, a unit of Deutsche Telekom AG. Some of those customers are purchasing IBM's zSeries mainframes, and using the company's Virtual Machine software to partition the mainframe to run hundreds of virtual Linux servers.

IBM is not leaving out those large-scale computing customers in its announcement Thursday. The company said it has signed new Linux deals with NASA's Jet Propulsion Laboratory; Air New Zealand Ltd.; convenience store operator 7-Eleven Inc.; Centrelink ABN, a service provider that hosts systems for the Australian government; and the Engineering Research Center at Mississippi State University.

The company is also planning to demonstrate next week a project it is working on with Triaton NA, a multinational e-business consulting firm, to build a 40-node Linux cluster using its xSeries servers.

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