Linux heats up the enterprise apps space

According to Scott Handy, director of IBM's Linux solutions marketing group, Linux has now matured sufficiently to be hailed as an "industrial enterprise-class Internet server for web applications", writes Fran Howarth, of Bloor Research.

Handy says that this has happened in a remarkably short period of time: three years ago, Linux was "only in the domain of the techies"; now it is being used to build powerful mission-critical applications.

Apparently, Linux is the fastest growing of all operating systems, with a cumulative annual growth rate of 34 per cent. In so doing, it is taking away market share from both Windows and Unix. According to IBM, Microsoft will never again achieve the annual growth rate of 40 per cent for Windows that it previously enjoyed. But what about software and applications? Here, Linux is playing catch-up, with Linux software growing at an annual rate of 65 per cent.

IBM is well known as a major supporter of Linux and has been backing the OS since 1999. Two years ago, it invested $1 billion in Linux and has made it a fundamental part of its business. This investment is now paying off - in the last year, IBM has achieved $1 billion in revenue from hardware, software and services related to Linux. It currently has 6,300 customer engagements involving Linux.

But does everyone else agree with them? Of the vendors producing enterprise business applications, SAP has been supporting Linux for four years now and has more than 1,000 customers, both large and small, using Linux. PeopleSoft announced recently that it is porting all of its 170 enterprise applications over to Linux in its next upgrade. Oracle currently has a large marketing campaign underway in support of Linux products and is certifying and supporting its 9i database product on the China-based Red Flag Linux operating system. It has announced that it will soon make its 9i application server and both collaboration and e-business suites available on Linux. And a host of other vendors have also started to support Linux, including mid-tier vendors such as Sage.

Figures given by IBM show that Linux is resonating with customers as well. Handy states that Wall Street firms have taken to Linux in droves, with such companies as Morgan Stanley, Citibank, eTrade, Merrill Lynch and the New York Stock Exchange using it. In Europe, financial services firms such as HSBC and Deutsche Bank are deploying Linux, and it is also making inroads into government and retail verticals.

In terms of geographies, Europe is still ahead of the US in terms of take-up, although there has been a noticeable increase in implementations in the US in the past couple of years, from the Wall Street companies mentioned above on the East Coast to Hollywood on the West. In Europe, Linux has the largest penetration in Germany in terms of overall IT spending - but Handy points out that German firms have traditionally been averse to Microsoft's offerings.

So why are people turning to Linux? According to Alan Jollans, manager of IBM's Linux marketing strategy group, the answer is three-fold.

Firstly, Linux offers tremendous benefits in terms of lowered cost - especially since use of Linux allows a company to make different hardware choices, such as moving over to Intel servers or changing from using server farms to running multiple copies of Linux on a mainframe. Secondly, Linux offers greater reliability as it is extremely stable. And finally, the fact that it is based on open standards makes it more flexible to deploy.

Going forward, we can expect to hear more noise from a greater number of software vendors about the applications that they are porting over to Linux - or even that they are developing afresh. And those applications will embrace an ever-wider range of industries. The penguin has come in from the cold.

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