I.B.M. to Use Linux System in Internet Software

I.B.M. to Use Linux System in Internet Software

By Steve Lohr
The New York Times

January 10, 2000

IBM, the standard-bearer of mainstream corporate computing, plans to announce Monday that it is placing a big bet on Linux, a symbol of software's counterculture, as the operating system of the future for the Internet.

The Linux campaign at the International Business Machines Corp. will include substantial financial investment, an aggressive marketing campaign and a reorganization. A high-profile IBM executive, Irving Wladawsky-Berger, former general manager of the Internet division, is being placed in charge of the company's software development for Linux, a version of the Unix operating system available free on the Internet.

The endorsement by IBM is the most striking evidence to date that Linux is no longer a fringe technology, one that has sometimes been viewed askance as more a political movement than a serious development in software.

In a memo last Friday to Louis V. Gerstner Jr., the IBM chairman, and to the rest of the senior management team, Samuel Palmisano, a senior vice president, described the rise of Linux as "an important shift in the technology world," as companies use the Internet more and more to overhaul their businesses.

"The next generation of e-business will see customers increasingly demand open standards for interoperability across disparate platforms," Palmisano wrote. "Linux -- a community-developed version of Unix -- will play a pivotal role in this. We will embrace Linux."

Linux is a leading example of so-called open-source software -- software that is distributed free, with its underlying source code openly published. Open-source technology, like Linux, is developed by an international community of programmers who also examine the code to fix bugs and suggest improvements.

In his memo, Palmisano said that IBM would retool all its own software so that it runs smoothly on Linux, and would work closely with the Linux open-source community to make IBM technologies available.

In addition, according to one company executive, IBM will probably set up a Linux software operation in India, which has become a hotbed of Linux development, and hire a Linux marketing executive from outside IBM by the end of the month.

Two companies in the Linux market, VA Linux and Red Hat, which make money by selling computers tailored for Linux or by offering technical support and services for Linux customers, have had highly successful public stock offerings in the last year.

But they are fledgling companies compared with IBM, which has close ties to major corporate customers around the world. And while IBM has been offering Linux on some of its machines over the last year, the announcement Sunday represents a wholesale, companywide embrace of the open-source operating system.

For IBM, the move is an effort to rejuvenate demand for its servers -- larger machines that run computer networks -- and to undermine key rivals, notably Sun Microsystems and Microsoft, whose proprietary software is increasingly used in the Internet commerce market.

Last October, IBM warned Wall Street that its earnings for the 1999 fourth quarter would be below analysts' previous expectations. It blamed the shortfall partly on depressed sales as companies put off purchases and instead spent information technology budgets on preparation for the rollover to 2000. Sales of servers, whether mainframes or smaller Unix machines, were a particular weak spot. Since then, analysts have been watching closely to see when, and how quickly, IBM's server revenues might pick up.

Palmisano, who previously led IBM's fast-growing services business, was placed in charge of the server business as senior vice president of the company's enterprise systems group. In a meeting with analysts last month in New York, Palmisano was quoted as saying the server business was a "work in progress."

In an interview, Palmisano called the Linux move "a long-term play, not something that will have a financial impact on the company in the next quarter or two."

But he said that if IBM could be a leader in the Linux movement, optimizing its machines and its software applications for Linux, the impact on the server, software and services business could be "huge for IBM"

Dealing with the highly independent, often anti-corporate Linux community promises to be a challenge for IBM. As Wladawsky-Berger observed, "Linux isn't so much an operating system as it is a culture."

Yet as Linux has become increasingly popular over the last year -- still mainly on servers instead of desktop machines -- IBM decided it should move early to embrace the technology. Like the rise of the microprocessor, which caught IBM on its heels in the 1980s, and the Internet, which IBM moved swiftly to assimilate in the 1990s, Linux is "another disruptive technology," Wladawsky-Berger noted.

"I can't tell you exactly where it's going," he said, "but it feels like another big thing."

The Linux announcement, according to analysts, is evidence that IBM is increasingly nimble in recognizing and reacting to new technologies. "IBM wants to make sure it's in the running as Linux develops over the next few years," said Jonathan Eunice, president of Illuminata, a research firm in Nashua, N.H. "It's a smart play, but a bit speculative."

Linux does seem to be gaining ground rapidly in the corporate world, at least as an operating system used for new applications for electronic commerce on the World Wide Web. A recent poll of more than 2,000 information technology managers by survey.com, an online research service, found that they planned to increase applications development for Linux and BSD, the other main open-source operating system, by up to 500 percent over the next two years.

"It's astonishing growth," said Dave Trowbridge, a senior analyst for survey.com. "The era of proprietary standards is dead. The Internet is changing the way software is developed."