The Linux Uprising

Meet Nicholas Walker, digital nomad. Like blues musicians who once wandered the South singing for

their supper, this 18-year-old high school dropout lives out of a suitcase–sometimes

trading his software programming skills for a place to crash or some spending

money. His travels have taken him far and wide, from a programmers’ confab in

Istanbul to Massachusetts Institute of Technology’s famed Artificial

Intelligence Laboratory. Walker’s fresh, earnest face tells all: He’s an

idealist. He believes in sharing his software innovations with others. "I’m

not comfortable with selling the things I do and making money from them,"

Walker says during a stopover at his parents’ home in New Hampshire.

Three hundred miles to the south, on the 12th floor of a

Manhattan office tower, Walker has an unlikely soul mate. Jeffrey M. Birnbaum,

37, is managing director for computing at brokerage giant Morgan Stanley’s

Institutional Securities Div. He’s so buttoned-down that he wears a suit on

Casual Friday. You would think this cog in the capitalist machine would have

nothing in common with young Walker. But Birnbaum is betting Morgan Stanley’s

technology future on the kinds of software projects, called "open

source," that Walker participates in.

Birnbaum has fallen hard for Linux, a penny-pinching

open-source alternative to computer operating systems such as Microsoft Corp’s

Windows and Sun Micro’s Solaris. He’s busy replacing 4,000 high-powered

servers running traditional software with cheaper machines running Linux.

Projected five-year savings: up to $100 million. Does it bother him that

counterculture kids like Walker have a hand in Linux? Not a bit.

"We see

their work, and it’s good," he says. Just when it seemed the technology world had lost its fizz, a

powerful movement is on the rise. A ragtag band of open-source programming

volunteers scattered around the globe–and hooked up via the Internet–is

revolutionizing the way software is made. At the heart of what they do is Linux,

an operating system flexible enough to run everything from an IBM supercompu-ter

to a Motorola phone. Because it’s open source, Linux can be downloaded off the

Web for free–though it’s typically bought by corporations as part of a

package that includes service.

The computer realm may never be the same. Imagine the havoc

in the energy business if some newcomer started giving away gasoline. Linux is

bringing on a convulsion of that magnitude in tech. Practically every tech

company is being forced to figure out how to take advantage of Linux–or to

avoid being swept aside by it. And don’t be fooled by Linux’

harmless-looking penguin mascot, Tux: This stuff is shaking up the balance of

power in the computer industry. It poses the biggest threat to Microsoft’s

hegemony since the Netscape browser in 1995.

Backed by technology titans such as Intel, IBM,

Hewlett-Packard, and Dell, Linux is just now going mainstream. From

DaimlerChrysler to Tommy Hilfiger–not to mention just about every major

brokerage on Wall Street–Linux is gaining ground. Coming from near zero three

years ago, it has grabbed 13.7% of the $50.9 billion market for server

computers. That figure is expected to jump to 25.2% in 2006, putting Linux in

the No 2 position, according to market researcher IDC. And get this: Starting

this year, No 1 Microsoft’s 59.9% share in the server market will reverse its

long climb and slowly slide backwards, predicts IDC. Meanwhile, Linux is finding

its way into countless consumer-electronics gizmos, including Sony PlayStation

video-game consoles and TiVo TV-program recorders. "Has Linux come of age?

The answer is absolutely, positively, unequivocally yes," says Steven A

Mills, group executive for IBM Software.

No one could have seen this one coming, not even Linus

Torvalds, the young Finnish programmer who wrote Linux as a cut-down version of

Unix for the PC in 1991. Torvalds figured it would be a free plaything for

computer hobbyists who weren’t satisfied by what big tech companies like

Microsoft and IBM produced. "If someone had told me 12 years ago what would

happen, I’d have been flabbergasted," says Torvalds.

How did Linux make the jump into the mainstream? A trio of

powerful forces converged. First, credit the rotten economy.

Corporations under intense pressure to reduce their computing

bills began casting about for low-cost alternatives. Second, Intel Corp., the

dominant maker of processors for PCs, loosened its tight links with Microsoft

and started optimizing for Linux in addition to Windows. This made it possible

for corporations to get all the computing power they wanted at a fraction of the

price. The third ingredient was widespread resentment of Microsoft and fear that

the company was on the verge of gaining a stranglehold on corporate customers.

"I always want to have the right competitive dynamics. That’s why we

focus on Linux. Riding that wave will give us choices going forward," says

John A. McKinley Jr., executive vice-president for global technology and

services at Merrill Lynch & Co, which runs some key securities trading

applications on Linux.

Microsoft takes the threat seriously. While it is holding on

to its monopoly in desktop systems, Linux’ march into servers threatens a key

growth area–one that controls much of the Internet. Microsoft chairman William

H Gates III and CEO Steven A Ballmer decline to answer questions on the subject.

But James Allchin, the group vice-president who runs the Windows business, calls

Linux "the No 1 competitor for this company", ahead of even IBM and

Sun. Because it’s free, Linux is undercutting Microsoft much the way Microsoft

has gutted its rivals with lower prices for the past two decades. But Microsoft

insists that Windows is more capable than Linux and argues that innovations–such

as its Tablet PC technology–will keep coming from commercial software outfits.

Frustrations, though, run high. One Microsoft executive,

chief strategist Craig Mundie, even calls Linux unhealthy for the technology

industry. "It ultimately is a question about whether societies are going to

value intellectual property or not," he says.

He has a point. The computer industry has been built on a

simple premise–companies invest to create software, sell it, and pour a good

part of the proceeds into building more. Now, with the open-source philosophy,

that stream of revenue is threatened. And it’s not just because the Linux

operating system is free. Before using open-source software, tech companies must

sign a license in which they promise to give away innovations they build on top

of it. "The business doesn’t go away," says Eric von Hippel, a

professor at MIT’s Sloan School. "But it changes forms. Instead of making

money from the operating system, you are going to have to make it

elsewhere."

For tech companies to thrive in this new world, they’ll

have to operate differently. This could mean building businesses around selling

services, as IBM does, or creating software that runs on top of Linux, like

Oracle Corp’s database. Dell Computer Corp benefits from Linux and sidesteps

its dangers by staying out of the software business altogether. Longer term, the

open-source movement threatens vast sectors of the software industry. True,

since the volunteer programmers often lack specialized knowledge, complex

business apps are probably beyond their range. But basic open-source databases

and e-mail are already available. What happens if corporate customers begin

gobbling them up? While no one knows how far open source will go, it could

deflate profits.

Like all big shifts, the Linux phenomenon will produce

winners and losers. Likely winners include IBM, which specializes in

high-performance computing and is selling twice as many Linux servers as any

other computer company. Processor maker Intel is riding Linux’ coattails into

the world of high-powered computing. And Dell is pumping out low-priced Linux

servers and selling them directly to companies via the Net. While Microsoft

stands to lose from Linux, the movement is inflicting far greater damage on Sun.

Some of Sun’s customers are migrating to Linux machines, which perform similar

tasks at a fraction of the price. Online stock trading site E*Trade Group Inc,

for example, replaced 60 $250,000 computers that run on Sun’s Sparc chip with

80 Intel-based Linux machines costing just $4,000 a pop.

What could derail Linux? The biggest risks are

intellectual-property issues. SCO Group, holder of the original patents for Unix

software upon which Linux is based, has announced plans to form a licensing

division and hire superlawyer David Boies to press its claims against sellers of

Linux. Another potential problem–there are a handful of commercial versions.

If they evolve into substantially different programs, software companies that

sell applications might have to create a separate version for each type of

Linux.

None of this, though, looks likely to halt Linux’ advance

any time soon. So far, the threat of patent claims is not deterring customers.

And sellers of Linux vow to keep their versions compatible with one another. A

recent survey by Goldman, Sachs & Co shows that 39% of large corporations

now use Linux. While many companies haven’t tried it yet, analysts expect an

improved version coming out this year to tempt a new wave of corporate tech

buyers.

The Linux phenomenon spreads like water–finding its way

into all sorts of surprising nooks and crannies. And that’s by design. When

Torvalds started writing the operating system on a $3,500 computer while a

graduate student in Finland, he made it both compact and flexible, so it could

be used in a host of ways. He also decided to share the technology freely with

others. The idea: Take it, build something, share what you make. Within weeks of

the now-auspicious 25 August 1991 date, when Torvalds first posted the bare

bones of his little program on the Internet, dozens, then hundreds, of people

from Japan to New Zealand to the US were responding with encouraging words,

fixes, and new features. He had tapped into a vibrant underground community–true

believers in the principles of open-source software–that would help him build

Linux into a global phenomenon.

Torvalds, now 33, still orchestrates this digital quilting

bee. He has final say on everything that goes into the updates of his operating

system–and doesn’t mind being called the "benevolent dictator" of

Linuxland. These days, Torvalds’ day job is programming for startup chipmaker

Transmeta Corp. in Santa Clara, Calif. He speaks at Linux conferences from time

to time.

But for the most part he prefers to stay in the background,

writing code, exchanging e-mails with his comrades-in-arms, and spending his

free time with his wife, Tove, the six-time women’s karate champion of

Finland, and their two daughters.

The open-source movement’s roots are decidedly more radical

than Torvalds’. In this software revolution, Richard Stallman, a former

programmer at MIT’s Artificial Intelligence Lab, plays the role of Karl Marx.

The 49-year-old Stallman, with his flower-child hair, has long believed in free

software, uncontrolled by copyrights. Back in 1984, when he set out to build

such a system, it seemed downright utopian. But Stallman persevered. With a

small group of programmers, he started building free software programs. Stallman

also created the licensing system on which Torvalds would eventually base Linux.

Open-source software programmers say they’re different from

Stallman in one major way: They don’t have a problem with people making money

off their work–or making money themselves. Miguel de Icaza, the Mexican

programmer who created GNOME, software that makes Linux easier to use, in 1999

co-founded Ximian Inc, a private Boston company that sells software for making

Linux easier to install and update. Still, de Icaza says it’s passion for the

work and not the prospect of riches that drives him. "I can’t tell if I

have worked all my life or if I have never worked a single day of my life,"

he says.

But if Linux’ surge continues, it will be due in large part

to the Goliaths of the tech industry. Companies including IBM, Intel, Oracle,

and Dell have thrown their weight behind it–and have given the technology

credibility with corporate tech buyers.

Intel, for instance, interested in expanding its role in the

corporate server market, convened a meeting of Wall Street heavy hitters to

consider Linux on Dec. 6, 2001, at the Michelangelo Hotel in midtown Manhattan.

Gradually, Intel and the Wall Streeters persuaded software makers such as

storage specialist Veritas Software and financial-information suppliers such as

Reuters Group to up their commitment to Linux. "Intel’s muscle on this

was incredible," says Bridget E O’Connnor, chief technology officer at

Lehman Brothers Inc.

As it happens, Linux fits comfortably with the strategic

imperatives of many of the industry’s behemoths. Take IBM. For a change, it’s

on the cutting edge of a technology shift. That’s because in late 1999, Sam

Palmisano, then head of IBM’s server group and now the company’s CEO, asked

his staff what the next big trend would be in servers. Their answer–Linux.

Within a matter of weeks, intensifying during what became known as the

"Christmas meetings", IBM decided to make Linux a pillar of its

strategy. In the next year, it earmarked $1 billion to retool its software and

computers to run on Linux and devoted 250 engineers to working with the

open-source community. With Linux, IBM was able to put tremendous resources

behind the trend toward lower-cost Intel chips without becoming more dependent

on Microsoft, its arch rival in corporate computing.

These days, even the titans of industry are hurrying to act

like rebels. But as the Linux movement continues to push its freeware into the

world, a delicate balance is forming. Its success hinges on keeping the peace

between two extremes: the volunteer programmers like Nick Walker, who pull

all-nighters writing code to change the world, and the commercial types like

Morgan Stanley’s Jeffrey Birnbaum, who use the software to save money. It’s

a weird twist on capitalism. But it just might work.

By Jim Kerstetter in San Mateo (California)

Inputs from Steve Hamm and Spencer E. Ante in New York and Jay Greene in Seattle

in BusinessWeek. Copyright 2003 by The McGraw-Hill Companies, Inc

Linux Everywhere

The operating system is finding its way into a wide variety of devices and

uses

Corporate

Computing



Linux is gaining ground in corporate data centers, where buyers use it for

running everything from Web sites to stock-trading systems. It held a 13.7%

market share in servers last year.

Desktop

Computing



Linux has 2% of the market, but it’s making converts. Wal-Mart sells $200

Linux-based PCs. In Spain, the region of Extremadura is giving away 10,000-plus

Linux-based PCs to residents.

Simulation



Daimler Chrysler is using Linux machines to simulate car crashes. With

Linux, it can do the simulations 20% faster and 40% cheaper than on more

traditional computing systems.

Digital

Animation



Pixar Animation Studios, creator of hit films Monsters Inc. and Toy Story,

is switching from Sun servers to Linux for the painstaking rendering of digital

characters.

Number-crunching



Oil explorer Amerada Hess is using a Linux-based supercomputer to help it

find pockets of oil and gas.

Consumer

Electronics



Linux is the digital brains inside TiVo television-recording devices.

Consumer-electronics companies are using Linux to build everything from game

consoles to TVs with Internet connections.