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Monday, May 24, 2004

IBM getting even with Microsoft via Forbes

Linux represents the biggest threat to Microsoft has ever faced. No wonder IBM is spending billions to promote it. Dozen IBM consultants has been toiling in the data centers and computer rooms of the Munich city government--free of charge, helping customer migrate from windows to Linux, IBM is investing in Linux software distribution companies,more than 12,000 IBMers today devote at least part of their time to Linux,in developing nations IBM has opened 20 Linux training centers,It conducts Linux feasibility studies for customers and even helps software makers rewrite their programs to run on Linux.
IBM has a broader agenda--undermining Bill Gates' company. Here lies the next big battle in tech, pitting two erstwhile allies against each other in a fight to rule the computer industry in the years ahead. As big corporate customers seek to lash together worldwide networks and imbue them with more online commerce, a new $21 billion market for Web-linked software has emerged.Microsoft wants to dominate this business and make it a Windows world. IBM has embraced Linux and in doing so has stoked the biggest threat ever to confront the Microsoft monopoly. While IBM's products run on Windows, it wants its customers to see how nicely they would run on Linux as well, using the free operating system as a lure. "Like getting free bread in a restaurant," says Irving Wladawsky-Berger, vice president of technology and strategy at IBM and a pivotal proselytizer of Linux inside the company. Ultimately, customers may not need Windows at all.IBM's embrace of Linux attacks Microsoft at its very foundation. Windows provides 40% of sales and 65% of operating income for the software powerhouse.IBM Global Services trained 3,000 people in Linux and launched a practice to help customers migrate to Linux. IBM also began using Linux in its own data centers. Linux now powers more than 3,400 servers inside IBM, including machines that run IBM's state-of-the-art 300-millimeter semiconductor factory in East Fishkill, N.Y. Now IBM is considering erasing Windows from its desktops and moving them to Linux, too.IBM has been helping companies move their applications to Linux. Software maker PeopleSoft rewrote 170 applications to run on Linux and bundles them with IBM software and hardware--after receiving assistance from IBM. Consulting firm Sapient accepted marketing dollars and discounted machines from IBM to rewrite a set of its applications for Linux and sell them on IBM servers.IBM says the Linux crusade is boosting business. Last year IBM's Linux-related revenues grew 50% to more than $2 billion. Even IBM's supposedly moribund mainframe hardware business grew 7% to just over $3 billion, thanks to Linux, which shipped on 20% of the mainframe horsepower IBM delivered last year. Some others have different viewpoint about these developments. Wladawsky-Berger is betting that IBM can make money selling software and hardware around those free layers."More money will be made in services and less in acquiring the software itself," he says. "Make no mistake: This is a business." Could Linux shift the balance of power in the computer industry to IBM's favor? Wladawsky-Berger suggests Microsoft has made a blunder by fighting Linux instead of embracing it. "For five or ten years Microsoft will continue to do very well," he says. "But perhaps they will become more of a legacy business, like our mainframes."
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