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Open Source Wall Street on Linux Momentum - "Linux Shines"
Wednesday, April 27 2005 @ 12:41 PM EDT

With all the questionable "studies" being floated around about Linux, how about a reality check? It is refreshing to note that Dion Cornett's Open Source Wall Street for April 26, 2005 adopted a unique method of measuring Linux momentum. He listened to what companies actually said about Linux and its effect on their bottom lines in their financial reports.

And what did he find? "Linux shines."

Note he also says that Microsoft's decision that Virtual Server 2005 with its Service Pack Update 1 would support Linux means Open Source software has now reached critical mass. Here's part of what he wrote.


Despite a choppy technology market, Linux shines

As evidence of Open Source Software’s growing importance, a broad array of technology companies reporting last week included, in their commentary, statements relating to Linux and Open Source software in general. While most of the companies mentioning Linux discussed it in terms of having a positive impact on their business, often driving their fastest growing revenue component, some such as SGI (SGI: not rated), directly attributed weakness in their business to Open Source-led commoditization. In any event, three primary themes were apparent: 1) the ecosystem of Open Source solutions is growing rapidly, 2) the replacement of RISC-based architectures with x86-base systems remains an important driver, and 3) enterprises are willing to pay for support of Open Source solutions.

Specifically as it relates to Linux’s growing ecosystem, Sybase (SY: not rated) reported that a third of new wins during the quarter came from applications running on Linux and that a recent IBM (IBM: not rated) partnership geared around their database engine, Adaptive Server Enterprise (ASE) for Linux, was proving successful. Pervasive (PVSW: not rated) indicates they have begun to see “exciting levels of market acceptance and commercial deployment” of Linux in support of their OSS database, Postgres. Emulex (ELX: not rated) reported they are “winning Linux-based business” and have their Open Source driver version 8, which supports binding of remote storage volumes, installed on RHEL 4. Even Microsoft (MSFT: not rated) announced last week that they would be providing Linux support in their new virtualization product. Finally, Informatica Corp. (INFA: not rated), a data integration vendor, believes that their early support of Linux provides a competitive advantage when competing against Ascential (ASCL: not rated), recently acquired by IBM. While we suspect that IBM will quickly improve ASCL’s Linux capabilities, we believe that Linux’s new role as a competitive weapon speaks to its growing influence. . . .

The bottom line is that we believe Red Hat (RHAT: Outperform) and SuSE (NOVL: Outperform) remain at the core of a growing ecosystem whose growth is compelled by significant hardware savings, competitive positioning, and the desire for improved manageability and security.

Understanding EMC’s fastest growing business helps explain why Linux should do well
Last week EMC reported revenue of $2.24B for the Mar-qtr, up 20% year-over-year, with software sales now constituting 37% of total revenue, up 26% year-over-year. More importantly, EMC’s VMware business was up 104% versus the prior year to $80M. VMware’s success particularly bodes well for the Linux vendors, as virtualization is often a key component of an enterprise consolidating multiple UNIX servers to a reduced number of x86 servers running Linux. Furthermore, we believe that EMC’s software success during the quarter validates enduser feedback we have received, which suggests that Infrastructure Software spending, particularly when related to initiatives such as resource consolidation and SOX and HIPAA compliance, remains a priority relative to other IT investments.

MSFT’s tacit approval of Linux
In an attempt to compete with EMC’s VMware, MSFT announced last week that Virtual Server 2005 with its Service Pack Update 1 would support Linux. We believe MSFT’s announced support for Linux validates our thesis about the broadening adoption of OSS. Furthermore, it indicates to us that OSS has reached a critical mass since MSFT offered this product in response to customer demands for better support for non-Windows machines. Finally, while MSFT potentially sees the move as a way to incrementally take applications away from Unix/Linuxbased systems, we believe the risk is much greater for MSFT that Windows-based servers will find incremental portions of their workload siphoned off to arguably more secure and stable Linux applications.


Open Source Wall Street on Linux Momentum - "Linux Shines" | 86 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Correction Here please:
Authored by: fettler on Wednesday, April 27 2005 @ 01:06 PM EDT
For those all fingers and thumbs

[ Reply to This | # ]

OT here please
Authored by: troll on Wednesday, April 27 2005 @ 01:12 PM EDT
If you wish to make links clickable...

<a href=""> clicky </a>

Do not forget to post in html mode and to use "preview" button.

Yours truly ...

[ Reply to This | # ]

Dion gets it
Authored by: rweiler on Wednesday, April 27 2005 @ 01:13 PM EDT
Dion Cornett seems to be a rare breed of analyst that actually does some
research. I'd still take his conclusions with a grain of salt, and I think
RedHat is overvalued. However it should obvious to anybody not paid by Microsoft
that Linux is growing by leaps and bounds and it is refreshing that mainstream
journalists and analysts are finally starting to notice. Now if only Sun would
figure out that they would sell more product if they sold people what they want
to buy instead of what Sun wants to sell them, I would be a happy man.

Sometimes the measured use of force is the only thing that keeps the world from
being ruled by force. -- G. W. Bush

[ Reply to This | # ]

Open Source Wall Street on Linux Momentum - "Linux Shines"
Authored by: blacklight on Wednesday, April 27 2005 @ 01:30 PM EDT
A complex UNIX (or Linux environment) is centered around OpenLDAP while the
centerpiece of s Windows 2000/2003 environment is Active Directory. Any hope of
efficient integration between Windows and Linux/UNIX has to be contingent on
Microsoft seeing the light and documenting its Active Directory (and various
versions thereof) with enough specificity that third parties can work with it. I
personally prefer OpenLDAP to Active Directory because OpenLDAP is, in my
opinion, significantly more flexible.

[ Reply to This | # ]

Didio's Biggest Problem ...
Authored by: Anonymous on Wednesday, April 27 2005 @ 01:46 PM EDT
is Microsoft itself. By announcing Virtual Server 2005 with its Service Pack
Update 1 would support Linux, Microsoft clearly refutes by its actions Didio's
"market research".

I can't believe that anyone would pay $5000 for a copy of a Yankee Group study.
It doesn't even make good toilet paper!

[ Reply to This | # ]

Open Source Wall Street on Linux Momentum - "Linux Shines"
Authored by: Anonymous on Wednesday, April 27 2005 @ 03:55 PM EDT
The sad thing is that while many companies are embracing
free software, they are doing it because it is free
(as in beer). We know this because most companies will
*not* pay programmers to develop free software or release
hardware specs so that free software may be developed for
such hardware. ie, "we must protect our intellectual property..."


[ Reply to This | # ]

Microsoft, are you listening? Open Source Wall Street on Linux Momentum - "Linux Shines"
Authored by: Anonymous on Wednesday, April 27 2005 @ 05:04 PM EDT
"...improved manageability and security..."

[ Reply to This | # ]

Re: MSFT's tacit approval of Linux
Authored by: Anonymous on Wednesday, April 27 2005 @ 05:18 PM EDT

I think MS is looking at this as a means to say ``You may not be running your application on a Microsoft operating system but Microsoft is providing the infrastructure on which your (pseudo)server exists.'' Just taking what they can get, perhaps. I seriously doubt this means that there is any ``tacit support'' of anything not invented in Redmond.

I'd be surprised, though, to find a lot of takers on their software. From what I hear from the folks in-house that are using it, VMware works well and has been working well for a while now. Why drop a good, solid product for one that's promising to add support for the fastest growing server operating system when there's a product that's doing a bang-up job today and will only get better. I can just hear the excuses from Microsoft now: ``Our workaround for the poor performance of the virtual servers when they are hosting Linux operating system is to convert them to Windows Enterprise Edition blah blah blah... Engineering is currently looking into the reports of poor performance. As a result of the ongoing investigation, a fix is not expected to be included in the next set of patches due 1H2006.''.

Microsoft's acquisition of this software was clearly one more case of their realizing they're behind the curve and jumping straight into reaction mode: ``Why don't we have that? What are we going to do to have a presence in that space? It'll take too long to grind out some code ourselves so who can we buy?'' They haven't figured out that the world might actually continue to exist if there is a market in which Microsoft does not have something to sell.

[ Reply to This | # ]

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