Thursday, December 26, 2002

As Linux advances, Microsoft alters message to lure customers

By Helen Jung
The Associated Press

SEATTLE - Microsoft Corp. executives have called the open-source software Linux a cancer. They've even described the increasingly popular operating system - an alternative to Microsoft's proprietary Windows - as un-American.

But now they're hoping to attach a different word: costly.

As businesses increasingly adopt Linux to run their computer servers, Microsoft is shifting the battleground from schoolyard insults or techie-speak to corporate notions of "business value."

"There has been a lot of debate in the Linux space that has been focused on the emotion and focused on the technology," said Peter Houston, senior director of server strategy for Microsoft.

Microsoft, he said, is trying to show customers that it's the best choice "when you make a buying decision based on the business value."

It's the latest turn in a battle that has the world's largest software company squaring off against a technology that is, for now, more political statement than commercial competitor.

While Microsoft is a single corporation that zealously guards the code underlying its Windows operating system, Linux is more difficult to pin down and has no single owner. The Linux community makes the underlying source code openly available for improvements by any programmer. Users can download the software for free.

The Linux hydra is growing a commercial head, too.

Companies including Sun Microsystems and IBM are rolling out products and creating business models based on Linux.

And Microsoft has seized on that development - and points out the technological expertise and labor needed to tailor Linux to companies' needs - in arguing that free isn't really free.

Linux can require costly technical staff, said Rob Enderle, an analyst with Giga Information Group.

"You lose the ability to buy something and plug it in," he said. "It takes you more time to do it. If the (Linux expert) leaves, you could be left with something that's unsupportable."

Still, customizability is part of its appeal, he said.

Houston said Microsoft is marketing its out-of-the-box ease, along with the fact that technical staffers are already familiar with Microsoft software, as big reasons companies should choose Microsoft server products.

The company even commissioned a study, by International Data Corp., concluding that in network infrastructure, file serving, print serving and security workloads, Linux-based servers cost more to run than Microsoft Windows 2000 server software over a five-year period. The report cites the staffing costs as the biggest reason.

Still, Microsoft has reason to worry.

Linux has been gaining ground in the market for software on new computer servers, so much so that one analyst firm, Meta Group in Stamford, Conn., predicted Microsoft will start offering limited products tailored for the Linux platform by the end of 2004.

Meta Group projects that Linux will grow from today's roughly 15 percent to as much as 45 percent of the market for new servers by 2006 or 2007. Meta says business-savvy Microsoft won't be able to resist the potential profits.

Houston denied that.

"We made this bet on Windows," he said. "It's paying off for customers and we're going to stick with that course."

The company also questions whether Linux will capture such a big share.

Several analysts say that currently, Linux's growth comes not from Microsoft but from Unix-based servers offered by Sun Microsystems, Hewlett-Packard and others. Once most companies abandon Unix in a few years, Linux's biggest opportunity for growth will be by cutting into Microsoft's share.

Linux may get a boost because of residual anger from companies and government agencies over Microsoft's new licensing program. That program, instituted this year, requires those who buy software in bulk to sign up for multiyear subscriptions for upgrades or potentially pay far more later on.

Although some customers said they signed up this time, they might not renew if they have a viable alternative.

Microsoft can tout potential savings and commission studies, but those efforts won't be any more effective in securing customers than its past tactics, Enderle said.

"To make that argument it really needs to be made by practitioners, not by the vendor itself," the analyst said. "To make it stick you really need company (information technology) managers to stand up."

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