A new study on future trends for Linux operating systems backs up claims made by several server makers that Linux should show strong growth in the data centre over time, proving itself as a competitor to Unix and Microsoft's Windows.
The report, entitled Fear the Penguin, was released last week by The Goldman Sachs Group and presents a case for Linux playing a larger role in the overall mix of server operating systems present in companies' data centres. Goldman Sachs argued that a steady maturation of Linux, coupled with its presence on relatively low-cost hardware that uses chips from Intel and Advanced Micro Devices (AMD), should make the OS an increasingly popular choice for corporate technology buyers.
The growth of Linux from its current position on lower-end servers that handle basic tasks onto systems that run key business applications such as large databases could prove troubling for companies such as Sun Microsystems, Hewlett-Packard and IBM, Goldman Sachs said in the study. Each of these server vendors draws billions in revenue from their Unix server business, which could suffer as more companies move to Linux. In addition, Microsoft may see its push into the data centre and its software pricing be challenged by Linux.
"Although the majority of corporations still appear to view Linux as a nascent technology that is not yet enterprise-ready, and some have already ruled out its use, our survey also suggests that Linux-on-Intel is beginning to gain a foothold in the data centre," Goldman Sachs wrote. "Respondents who chose Linux in the data centre cited the price/performance advantage of Intel-based hardware over traditional proprietary RISC-based servers and the stability and security of Linux as primary drivers for that choice."
Most analysts and vendors agree that Linux performs well for certain tasks on servers with four or fewer processors. The industry has said it will take time for the OS to get the kinds of high-end features needed to run on the types of Unix servers that currently power crucial software. Goldman Sachs likewise said it will take several years for Linux to grow up, but also said it could have a profound effect on the server market once it does.
Although Linux could spell trouble for the Unix vendors, the study does point out that companies such as HP, IBM and Sun all have started shipping Linux servers and investing in the OS, which could open up new opportunities for these vendors. The expertise these companies have gained from building earlier high-end servers with 16 or more processors will make it easier for them to take Linux servers to those heights. Their ties to existing customers also could help them move Linux into more data centres. In addition, Goldman Sachs expects HP, IBM and Sun to bring some of the more advanced features of their Unix operating systems down to Linux over time.
Still, Linux will challenge their existing Unix franchises and open doors for companies such as Dell Computer that have not invested in Unix to compete on an even playing field, the study said.
For Microsoft, the threat of Linux is slightly different. Microsoft has yet to gain as much ground as the Unix vendors in the data centre, so it will have to compete with the OS for mind share among new clients.
"We believe that Linux will not take away market share from Microsoft in its traditional markets; however, it is our view that it will hamper the movement of Windows into the enterprise data centre, an area Microsoft has only recently begun to target for growth," Goldman Sachs wrote in the report.
Difficulties associated with porting software from Windows to Linux should make it harder for Linux to penetrate Microsoft's existing customer base, Goldman Sachs said. However, Microsoft could face more pressure to keep its products competitively priced as Linux gains ground and becomes a more viable option.
Microsoft may also face challenges as applications based on J2EE (Java 2 Enterprise Edition) grow on the Linux platform and compete with its own .Net software. Companies such as BEA Systems, IBM and Sun all use J2EE at the core of their application servers and could show continued growth as customers place more of their processing burden on servers as opposed to clients as in the Microsoft world, Goldman Sachs said.
"The use of J2EE application servers allows applications to be portable across operating systems, which, importantly for Linux, lessens the importance of the choice of the underlying hardware and operating system," Goldman Sachs said.
Overall, the growth of Linux on servers could also have an effect on software pricing for a number of vendors, it concluded.
"The emergence of Linux could also prove to be a negative for the software industry in general, as its success could lead to a proliferation of open-source models in other areas in software, which could drive down pricing in each of those areas," the report said.
The Goldman Sachs study appeared in contrast to a late 2002 report from IDC that claimed Microsoft's server operating systems can have cost advantages over Linux, due mainly to savings associated with administration. The IDC report was commissioned by Microsoft.