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IBM is sacrificing revenues from WebSphere to win customers who only want light-weight application servers with its Gluecode open source product, acquired in May.

IBM senior vice president and software group executive Steve Mills said Tuesday Gluecode would be sold to small businesses that don’t want features in WebSphere, like transaction processing.

Speaking at LinuxWorld in San Francisco, Mills said IBM has previously discounted WebSphere, the number one application server in market share, to tap SMB customers.

“We ended up selling WebSphere, which was more than the customer wanted and sold it at an outrageous discount,” Mills said. “We could have been selling Gluecode at that price, and it would have been what the customer wanted.

“If it eats into our central franchise, so what? It’s more business and more money.”

Mills outlined IBM’s Gluecode strategy as part of a plethora of LinuxWorld announcements that included support by IBM for the Apache Software Foundation’s (ASF’s) Geronimo application server. Geronimo is the open source foundation to Gluecode. IBM is also donating Gluecode’s system management console to the Geronimo project.

IBM additionally announced it has increased its focus on developing and selling Linux and open source offerings in ways that meet needs of vertical sectors. IBM billed the move as its “most significant” reorganization of the Linux sales and marketing operation since the computing and services giant embraced Linux five years ago.

IBM said the re-alignment means it can deliver server, storage, middleware systems and consulting that work better for both IT decision makers and line of business decision makers. IBM’s vice president of worldwide Linux Scott Handy said IBM could, for example, deliver a consistent experience in banking across ATMs, internet and branch systems and cell phones.

In more Linux news, IBM’s Lotus Domino Web Access messaging client now supports Firefox 1.0.x. The move means Lotus Domino Web Access can now use Firefox to access e-mail, calendaring and scheduling, replication and business applications. ®

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