[TriLUG] Microsoft will support Linux

[al johson]

Analysts: Microsoft will support Linux

By Joe Wilcox and Stephen Shankland
Special to ZDNet News
December 10, 2002, 12:50 PM PT

The growing popularity of Linux will force Microsoft to bring its software
to the Unix clone starting in late 2004, a research firm predicted Monday in
a study that Microsoft promptly disputed.
By 2006 or 2007, Linux will run on 45 percent of new servers, Meta Group
predicted in a study released to clients on Monday. That popularity, Meta
said, will lead Microsoft to offer Linux support for its server software,
including its .Net foundations for next-generation Internet services, its
Exchange e-mail and calendar software, its Internet Information Server for
hosting complex Web sites and its SQL server database software.

The software titan, which has no love for Linux technology and its
open-source philosophical underpinnings, quickly dashed water on the report.

"Microsoft will not be engineering server software expressly for Linux, and
continues to make its strategic bets on the Windows platform," Peter
Houston, senior director of Windows Server Strategies, said in a statement.

But the rapid spread of Linux could force Microsoft's hand, said Meta
analysts.

"We think Linux server stuff is going to be huge, and we don't think that's
something Microsoft can walk away from," said Meta Group analyst Dale
Kutnick. "We think Microsoft will (support Linux) because there are powerful
economics. Microsoft is an economically driven company."

Meta also said it believes that Microsoft will reprice Windows, or separate
it into new versions, so that it "can be favorably compared against 'free'
Linux." This breaking out of components would be contrary to Microsoft's
longstanding practice of bundling products together to thwart competitors.

On the other hand, Meta did not expect Microsoft to begin developing Linux
software, such as a version of Office for the Unix variant.

If it proves accurate, Meta Group's forecast would indicate a much more
rapid adoption of Linux on servers than anticipated. Advances in Linux
installations would put Microsoft in a defensive position. While the
Redmond, Wash.-based company's proprietary software commands more than 90
percent of the market for desktop operating systems and productivity suites,
dominance in the server market is less certain.

How far Linux goes in the server market--and eventually the corporate
desktop arena, where the it has had only nominal success--would seem to
warrant some Microsoft response, Meta Group concluded. Microsoft certainly
takes Linux seriously. In September, CEO Steve Ballmer described Linux as "a
serious competitor...Linux isn't going to go away--our job is to provide a
better product in the marketplace."

A competitive quandary
But the software giant appears uncertain on how to handle the growing
interest in Linux, according to other analysts.

"Microsoft's competition with Linux is unlike any other they've had before,"
said Gartner analyst David Smith. "They're not going in as the low-cost
provider. Even if you buy the studies that indicate there's not that much
difference in cost or that Microsoft is cheaper, at least initially people
go in thinking Linux is cheaper because initially it's free."

A study from IDC last week--sponsored by Microsoft--concluded that in the
long term Windows would be cheaper to use than Linux. Kutnick agreed with
that conclusion: "The difference between running Linux on Intel (processors)
and Windows on Intel is neglible in terms of cost."

Meta also found that other factors, such the type of processors and
applications available for these systems, will have a significant impact on
"shadow IT costs" associated with Linux. In fact, the research firm
concluded that because of these cost factors, until 2004, "Linux will be a
larger threat to Unix--particularly Solaris--than to Windows."

Still, the perception of lower cost, and the presence of the GNU General
Public License (GPL) used by Linux, have put Microsoft in a competitive
quandry.

Smith said that Microsoft "can't use...tactics that have been successful
over the years, such as bundling or tying. They're just not going to work.
It's a whole new world of competition, and Microsoft can't use the same
tried-and-true methods. They're struggling with how to deal with it."

Microsoft, Smith added, would like to support Linux, "if they were able to
figure out a way to embrace and extend it. But I don't see how Microsoft
would support Linux, unless it could pull a Java, per se."

Sun Microsystems has accused Microsoft of supporting Java, its
cross-platform programming language, in a way that favored Windows only. The
two companies were in court last week for three days for a hearing that
could determine whether a federal judge would compel Microsoft to carry
Sun's Java Virtual Machine in Windows.

Microsoft might have taken a similar tack with Linux if not for the GPL,
which would require the company to make public any source code used in the
process. Company executives have sharply criticized the open-source
licensing scheme.

"One of the reasons they hate the GPL so much is they can't extend and
embrace Linux without burning themselves," Smith said.

But IDC analyst Dan Kusnetzky questioned Microsoft supporting Linux for
other reasons. The company favors Windows when developing software over
other operating systems.

Meta's Kutnick didn't see that this would matter in the long run. "Microsoft
isn't going to walk away from its religious principles of Windows-only
easily, but more than 40 percent share of a market they want to get a handle
on is difficult to pass (by). I think their principles of making money will
be more important than their principles of Windows only."

Linux by the numbers
Other analysts question whether Linux's success in the server market will be
as great as Meta predicts. According to IDC, Windows Server had about 49
percent market share at the end of 2001 compared with nearly 26 percent for
Linux. Windows Server shipments rose about 4 percent year over year, while
Linux declined slightly.

But Kusnetzky acknowledged that the market research firm's data doesn't
account for all the Linux server installations. "In the Linux numbers, we
are only counting shipments that people paid for," he said. "Free replicas
or free downloads are not quoted in the numbers we make available. They're
only revenue shipments versus revenue shipments."

This difference could be significant, considering the Linux licensing model,
which would allow redistribution of the software on multiple servers at no
additional cost.

Kusnetzky did agree with Meta that Linux was about to break through the
early-adopter phase and into the mainstream.

"Linux took the No. 2 position in the market in 1999, bypassing both Unix
and (Novell's) NetWare," he said. "We are expecting that Linux will continue
in importance over time. Right now, Linux is not considered a mainstream
choice by organizations in all markets. It's expected to become a
mainstream...probably by 2005."

Gartner's shipment data, which is more up-to-date than IDC's, shows strong
gains by Linux and a nominal increase by Windows.

Kusnetzky and Kutnick both saw Linux making gains in response to Microsoft
tactics and pricing.

"Linux continues to be increasingly important, if nothing else as a viable
alternative when speaking to Microsoft," Kusnetzky said.

By installing Linux, he said, large companies "want to have more leverage
negotiating with Microsoft. The more diverse environment they present, the
more likely they are able to say, 'Give me a discount or I'm going over
there' and be believed."

"We see a backlash against Microsoft in some respects, which is why we see
some people going to Linux," Kutnick said. "There's some from licensing, and
there's a perception from some governments and countries that Microsoft is a
monopoly. They want an alternative. Linux is gaining in popularity
particularly in Asia, for example, where (companies) want more control of
their destiny."