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Old 13.08.2002, 08:36   #1
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Post Microsoft changes its tune toward Linux

Microsoft changes its tune toward Linux
By Brier Dudley
Seattle Times technology reporter

Microsoft executive Peter Houston wasn't too worried about the reception he'd get at the LinuxWorld conference this week in San Francisco — until he heard about the pie cannon.

Let's hurl pies at Microsoft's booth at the show, suggested several people on a Linux Web forum. It was the kind of sentiment shared by many devotees of the freely shared software that has become one of Microsoft's biggest threats and a rallying point for its critics and competitors.

But pies or not, Microsoft is making its debut at LinuxWorld after years of ridiculing Linux and its licensing scheme.

Highlighting the show tomorrow and Wednesday are keynote speeches by Microsoft's biggest rivals, including Sun Microsystems Chief Executive Scott McNealy and Oracle Chief Executive Larry Ellison. And on the trade-show floor will be dozens of companies trying to take its business with low-priced Linux-based applications that replicate Microsoft products.

Houston, senior director of Microsoft's server division, is entering this arena with a team of six. He expects that most of the people who visit their booth will be reasonable.

"The other side of the reaction, I'm hoping to avoid," he said.

Linux was created 11 years ago by Linus Torvalds, a Finnish techie who shared the source code for his operating system and invited others to make improvements and build their own customized versions.

Companies can license and sell Linux-based products but the underlying source code is shared freely.

Growing market role

As Linux evolved and was improved by programmers around the world, it spread from hobbyists and academia into the mainstream. It now runs everything from $300 PCs sold by Wal-Mart to massive data-serving machines used by Wall Street brokerages and the government.

But the strongest market for Linux — and its primary challenge to Microsoft — is in inexpensive servers handling peripheral tasks such as running Web pages at small- to medium-size businesses.

Linux has become the second-most-popular server software behind Microsoft products, according to IDC, the research company. In 2000, Linux accounted for 27 percent of all new server licenses sold; Windows accounted for 41 percent.

Sales of Linux systems are expected to grow from $80 million in 2001 to $280 million in 2006, according to IDC analyst Al Gillen.

Microsoft's attendance at the show gives credence to the momentum of Linux, Gillen said.

"They no longer are taking an attitude that it's not real and it's a destroyer of intellectual property and we can't get near it. That's behind Microsoft now. At this point they're looking at it as, 'OK, it's a real thing, we have to deal with it,' and one of the places they're dealing with it is at the show."

Analyst Laura DiDio at the Yankee Group consulting company in Boston believes Linux is poised for further growth in part because resentment of Microsoft was fueled by a licensing plan that raised prices for most customers when it took effect July 31.

"If the Linux vendors can get together and exploit this opportunity, they have a shot at making some inroads, especially at small- to mid-size businesses," she said.

Watch the competition

Microsoft isn't heading to San Francisco to pick a fight. Houston said the company is setting up a booth so it can scope out the competition and offer Microsoft products as an alternative for technology buyers at the show.

Some of those buyers are also Microsoft customers, since most companies use a mix of different software products.

"We want to make sure that if there are things that are being done by competitors around Linux, that we are learning from that and we're doing what the customers want us to do," he said. "We will listen to every forum we can to learn what customers want us to do better."

The approach is part of an effort by Chief Executive Steve Ballmer to make the company appear less confrontational and a better partner in the technology industry.

But until recently, Ballmer and other executives did their best to antagonize Linux supporters.

In a 2001 interview that is continually cited in Linux circles and the press, Ballmer told a Chicago newspaper that open-source software is a "cancer." And last April, Chairman Bill Gates told foreign leaders visiting Seattle that their economies would remain agricultural if they funded university research into noncommercial software.

Big vendors' concern

By attending the show and communicating with Linux supporters, Microsoft is following other large software vendors that have realized their customers are intrigued by Linux and a cooperative approach can be more productive. But it's unlikely that Microsoft will go as far down that path as IBM and Sun, both of which have engineers working to improve Linux and add its products to their lineup.

IBM has backed Linux for about five years and has more than 250 software developers working to improve the shared code and develop Linux products. The business last year generated $1 billion in sales, and Linux products now account for 20 percent of its mainframe sales, said John Sarsgard, vice president of worldwide Linux at IBM.

"It's probably double what it was a year ago, so it's growing very, very nicely," he said.

Sarsgard said one reason IBM embraced Linux is that customers want the flexibility of a low-cost system without a restrictive contract. In some cases Linux servers may be used as an interim solution, so IBM sees an opportunity to sell its more expensive, proprietary products when the customer upgrades. Linux also helps IBM sell its hardware and support services.

The Linux business also helps IBM compete with Microsoft and Sun, which had snubbed Linux in favor of its Solaris operating system. Now Sun is not only supporting Linux development, but at the show it's introducing Linux servers aimed at the low-end market dominated by Microsoft.

"I think IBM had to evolve," Sarsgard said. "Maybe other people will have to also."

Brier Dudley can be reached at 206-515-5687 or [email protected]
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