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Linux OS to celebrate 10<sup>th</sup> birthday

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CIOL Bureau
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Adam Pasick

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NEW YORK: When the alternative operating system Linux turns 10 on Saturday,

some of the world's largest technology companies will help it blow out the

candles - along with some of the tech sector's most downtrodden firms.

Ten years after Finnish computer programming student Linus Torvalds first

announced Linux's release, the open-source poster child has won the hearts of

corporate giants like International Business Machines Corp. and Hewlett-Packard

.

The software is called open source because its underlying code is freely

available, unlike the closely guarded proprietary code of companies like

Microsoft.

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But the aggressive young companies that helped bring Linux to the fore,

including VA Linux Systems Inc., Red Hat Inc. and Caldera Resources Inc. have

been largely left out of the party, with formerly sky-high stock prices slashed

and business models ravaged.

Among larger firms, IBM in particular has put Linux at the center of its

software strategy, pledging $1 billion in investments and blanketing cities with

"Peace, Love & Linux" billboards. On the flip side, VA Linux has

abandoned its core hardware business and seen its shares fall to $1.60 after an

opening-day record climb to $320.

"Linux, because it's somewhat synonymous with the Internet, has grown on

an Internet timetable," said Ly-Huong Pham, chief executive of Turbolinux.

"And just like the Internet boom, the Linux boom went out with a big, short

bang." The shortcomings lie not with the operating system itself, analysts

said, but with the business models of the Linux companies.

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"Many of the big players who have seen opportunities for Linux already

had a sound business model," said IDC analyst Dan Kusnetzky, at research

firm IDC. "Many of those (smaller companies) who started with Linux did not

- they were experimenting."

He predicted that a handful of Linux firms such as Red Hat and the

privately-held German software company SuSE would survive, but that dozens would

be acquired or close up shop in the next five years.

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Open source: a primer



To see why some Linux firms have floundered, it's important to understand the
operating system's "open-source" nature.

Companies like Microsoft keep the inner workings of their software tightly

under wraps. But under the terms of Linux's open-source license, its code is

freely available - both for programmers to make changes to suit their needs, and

for anyone to download over the Internet at no cost.

This software version of peer review has helped make Linux a lean, reliable

operating system. But it has made it difficult for companies like VA Linux,

which until recently made hardware, to compete against larger, entrenched firms,

according to Kusnetzky.

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"Some Linux companies tried to make a business with value-added

hardware, but that's not a sustainable model," he said by way of an

example. "If IBM comes in and says, 'We have worldwide offices and a whole

range of hardware,' who are people going to hear?"

One big enemy



Not all of the tech sector's major players are fans of Linux, particularly the
industry behemoth based in Redmond, Washington. Microsoft mounted an attack on

open-source software like Linux in May, when Senior Vice President Craig Mundie

called the model "flimsy" and "flawed."

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"Open source is not going away," said Eric Allman, who created the

Sendmail program that directs the lion's share of the world's e-mail traffic.

"But the one risk is that Microsoft is going to stomp on us. They're so

powerful and have so many resources... they might actually be able to do

it."

No matter which companies reap the rewards, analysts say Linux will continue

to grow in popularity, particularly for large server computers. Linux's share of

the server market grew from 24 per cent in 1999 to 27 per cent in 2000, and is

projected by IDC to remain the No. 2 server operating system behind Windows

through 2005.

Linux is particularly adept at connecting multiple computers, sometimes

spread across the globe, into a virtual supercomputer. IBM, for example, has

announced plans to create Linux-based "grids" of computing power for

the Lawrence Livermore National Laboratory and the US Energy Department.

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The refrigerator OS?



The operating system also has good prospects at the lower end of the spectrum,
powering small devices like cell phones, set-top cable boxes and intelligent

household appliances.

Where Linux is unlikely to thrive - except for niche markets like

engineering, Hollywood special effects and a few developing countries - is in

the personal computer market, according to IDC's Kusnetzky.

"On the desktop it hasn't done as well," he said, with market share

growing from a scant 1.3 per cent in 1999 to 1.5 per cent in 2000. "The

desktop applications that are most popular, like Microsoft Word, aren't

available."

That missing puzzle piece may leave Linux well-positioned at the high-and

low-end of the market, but missing from the vast middle ground - and practically

invisible to the general public. But it may not be a bad thing for Linux to

thrive offstage, quietly running the computing systems the world depends on.

"That's one of the delightful things about it," Kusnetzky said.

"Why should you have to know?"

(C) Reuters Limited 2001.

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