IBM faces tussle at the teller machine

IBM Corp. is pushing Linux as the upgrade path for current users of IBM's venerable OS/2, but most customers of OS/2 computing, especially branch banking, are looking towards a Windows migration.

As support ceases for the operating system after 2006, IBM is recommending that OS/2 customers migrate to Linux. However, banks in Singapore are resisting this effort.

In Singapore, there are over 1,500 ATMs (automated teller machines) spread over three networks. DBS' network dominates with over half the machines, UOB-OCBC the second and a third new major network, since March 2002, shared by HSBC, Maybank and Standard Chartered Bank.

"Since IBM is no longer marketing OS/2, banks are primarily refreshing their front-end infrastructure with Windows. I have not heard of any major replacements using Linux in Singapore. In countries such as China and India, financial institutions are replacing some of their legacy SCO-Unix systems with Linux servers for running branch automation applications," said Rajnish Arora, senior program manager, Asia Pacific, Enterprise Servers and Workstations Research at IDC.

Head of Information Technology Division in Maybank Lim Kuo Siong said that Maybank is using IBM OS/2 as well as Windows on their network of ATMs, cash deposit machines, Internet kiosks and passbook machines. "We are prepared to consider Linux later when these considerations are met, with reduced total cost of ownership. But bear in mind that Linux does not mean free of charge," he said. "Before we choose an operating system, we have to make sure that there are well tested interface drivers and that we can develop on the platform quickly and effectively."

Elsewhere, IBM's Linux push does not seem to be getting a favorable response in the United States. The two largest ATM vendors - NCR and Diebold -- have both adopted Windows as their OS/2 migration paths. "Financial institutions that buy ATMs have indicated Windows is the direction they'd like us to go, and in fact our competitors are all on Windows," said Phil Kasper, assistant vice president for Marketing at NCR. Kasper said NCR is making a "drastic" changeover to Windows this year and will completely phase out OS/2 by 2005.

Keith Lewis, senior marketing manager at Diebold, said his company still installs OS/2. He couldn't say when Diebold would be able to completely move off the operating system.

David Kerr, director of Industry Solutions Development in the WebSphere Division of IBM in the United States, has argued against installing Windows on bank teller workstations, electronic bank kiosks and ATMs, saying it is a proprietary approach that stifles competition. "Banks, being frugal with cash, would prefer to purchase from a competitive marketplace so they don't get tied to a certain vendor. That certain company has demonstrated the pricing power it has by (suddenly) changing its licensing model before," Kerr said, referring to Microsoft.

Kerr said IBM customers who chose Linux over Windows as a replacement for OS/2 will have functionality that is comparable to that of Windows-based systems.

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