Linux train late – but still coming

Open source solutions are gaining in popularity but there’s still work to be done.

Global service provider EDS caused a ripple across Australia’s IT community last month when a visiting US executive claimed Linux was off the radar, due to problems with security and scaleability.

Robb Rasmussen, who manages EDS’ global alliances, told news media at the Sydney launch of the multi-vendor EDS Agility Alliance that Linux would not factor as a player alongside alliance partners such as Cisco, EMC or Microsoft in the foreseeable future.

That is despite Linux’ undoubted success in recent years, particularly in the server space. Rasmussen says platforms and applications linked in an open environment often have holes. "We are not as confident on Linux in the corporate environment in terms of securing it. We are not strongly backing Linux and we are watching to see what happens," he says.

There are also unforeseen problems scaling across geographies with Linux, he says. Yet EDS’ own website proffers a case study that claims open source offers licensing cost savings and a chance for faster, better support.

Con Zymaris is chief executive of Cybersource, an IT services and solution provider based in Melbourne. "In the first instance, all the major players are making more money off Linux," he says.

Zymaris says the likes of IBM and HP sell "something like" $7 billion in Linux-related products globally. Mostly, that’s been in hardware consultancy and services, but some are seeing "very broad" adoption of Linux among their customers. "It is easier to replace a Unix system with a Linux system," he adds. "Linux is now the de facto Unix."

Also, users running Microsoft applications such as Small Business Server and/or ones like NT 4.0 that the software giant no longer supports are still migrating to Linux as predicted, Zymaris says.

"They can upgrade to the latest version of Windows," he says. "But the cost of doing that upgrade is more expensive." Cost savings are still critical, even as the IT purse-strings at many Australian companies supposedly loosen up.

Zymaris says Cybersource sells some of its Linux solutions "in the dozens". Although that’s not a large number, for a small company like Cybersource that is not focused on retail, it is significant and suggests much more could be sold through the channel, he says.

"People that do [retail and reselling] should be able to do 10 times more than that," Zymaris says. "And we get more money from doing our $2000 Linux server install than another company would doing the $10,000 Microsoft installation."

Cybersource sells its Safe Internet Computer (SafeIC) media kits to resellers at $99. The SafeIC system, including hardware and software, retails for $595. The hardware needed by a SafeIC wholesales around $350, he says.

"Resellers can therefore make around $150 profit for each SafeIC system they ship. Information on the SafeIC is attached, along with the online user manual,"Zymaris says.

Cybersource also sells a Small Business Linux Server (SBLS) Build system for a $4000 annual subscription and $1000 set-up fee. Resellers can build an SBLS in two minutes but must provide their own server hardware.

"They can then sell these servers at whatever price their market can bear. There are no ongoing licence fees or other costs. Selling one server every three months covers the cost of the maintenance fee," Zymaris adds. "Selling more is pure profit."

Fourteen years back, Cybersource did not sell much Linux at all. Today, about 80 percent of its business is Linux-related. "At no point has Linux adoption actually gone backwards," Zymaris says. "A lot of businesses are fed up with kowtowing to big vendors."

However, Anthony Rumble, managing director of reseller Everything Linux, has a somewhat different take on the open source sector. "It depends what areas you’re looking at. Certain areas are going well. But box-moving is not going well," Rumble says. "Sales of Linux software are not going well and I put that down to broadband."

Some hype around Linux has worn thin. People aren’t as excited about open source any more and are sticking with what they already have instead of investing further, Rumble says.

Most boxes that do still shift can now be sourced easily from mainstream dealers. And when users do want upgrades or a new application, buying directly online is easy if you’ve got broadband, he says. "Every man and his Chihuahua can sell it to you," Rumble says. "But is that going to backfire on major distributors eventually? I think it will."

Once more, services are where it is all starting to happen, he says, although the ubiquitous men and small Mexican dogs are all over that market too.

Rumble is philosophical, however. People eventually are going to start insisting on resellers who "know what they’re doing" again and the wheel will have turned full circle. "Services and technical people cost money," he says.

Only freeware, after all, is actually free to buy and even then there are likely to be support costs if you really want to keep things working. And being prepared to pay for it and factoring that in can actually work out for the best, Rumble adds.

Resellers that figure out how to successfully pitch consultancy and support to SMBs could mine the mother lode as far as Linux revenue is concerned. Support has to be done, either in-house or by an outsourcer. Choosing the latter means no payroll tax, no PAYG, and few human resources or occupational health hassles, Rumble points out. "And I think this is starting to happen," he says.

Thin client-style ways of delivering solutions are starting to multiply and Rumble believes that is one key towards successful delivery of open source-related services and applications to the SMB. "That’s where we see the biggest movement for us but you do need to have the experience," Rumble says.

He agrees a lot of people are still running Windows on their clients but using a more mixed environment overall that makes cost savings. Linux is a good partial answer for many users, and the increased interest from the public sector has emboldened many to dip their toes farther in.

Everything Linux has been helping out various greenfield projects that have decided to go open source or open source-derived in some areas, Rumble says.

"There’s a lot of work happening on the edge areas," Rumble says. "And I still think that the full desktop is within reach, although there’s still a lot of work to do there."

More software must be made available for the platform, for one thing. Also, users need to figure out whether the difficulties they have with Linux are due to the platform itself or are merely the result of trying to adapt to something different, he says.

"We try to get all the information [in such situations] and feed it to the developers," he adds. "But it’s not that hard to find people to do Linux stuff now."

Rumble does not put much stock in EDS’ public disparagement of Linux. "EDS has
always been a bit confused about what it was doing," he says. "If a big enough client comes along and says, 'We’ve got 5000 Linux boxes and we want you to support them', [EDS] is not going to say no."

Linux as a product is still good. "It’s really just a matter of doing all the same things as in the early days with Windows and DOS. It’s the same mistakes, just a little bit later," he adds. Any problems are with the people and the resources applied to the product, Rumble says.

Avnet Partner Solutions has just signed up, in February, with Novell to distribute SuSE Linux software. Colin McKenna, managing director for the company in Australia, says it’s too soon to tell how good the results will be.

For Avnet, SuSE Linux dovetails nicely with the offerings of major Avnet partner vendors such as IBM and HP. Novell’s excellent reputation, McKenna says, was another crucial factor in the decision to take SuSE Linux on board. "We see the relationship with Novell as long term being very [productive] in the corporate market," he says.

The product itself may matter less, McKenna suggests, than whether there is a market and a strong vendor with whom to partner. Novell has a great corporate image, he says.

"Our job is not really to create markets, more to create channels. The market is created by the vendors," he says. "Our take is that Linux is strategic. It is growing."

Linux will appeal to Avnet’s large Unix partner base and also to its high-end Windows ISVs who want a Linux offering as well, McKenna says.

Novell has opened a Linux certification and testing centre in Australia as part of the deal. Some 500 Australasian ISVs will be able to use the centre to polish up their SuSE skills, he says. "It’s early days yet, but we’re feeling pretty bullish about [Novell and SuSE]. We think it’s going to be a good value-add," McKenna says. "We’re obviously not looking just to sell Linux solutions but the infrastructure with it."

Sandeep Chandiramani, partner and alliances director at Red Hat, says the vendor, whose channel program here is still quite young, has about a dozen Australian business partners and one hosting partner, Macquarie Corporate Telecommunications.

"In the hosting market, we’re for companies that can’t afford to have their own systems," he says. "That also works for enterprises that require a very high level of security."

Chandiramani says OEM is seeing a lot of growth. Individually, partners such as BlueConnections in Victoria and local government specialist Civica have already been quite successful. "Our bookings in Australia are growing 100 percent year-on-year, although that does not translate into the same amount of revenue growth because of our subscription revenue model," he says.

Striking while the market is young helps partners dig in as that market begins to take off, Chandiramani points out.

Desktop use is still at the early adopter stage, but server deployment is still growing strongly for the vendor. Red Hat has a couple of desktop-related projects cooking with channel partners just at the evaluation stage, he says.

"At this stage, we can’t disclose much but what we are seeing is it’s going quite strongly because we have a channel partner who is actually focused on migrations," he says. Red Hat and Windows compete primarily in the enterprise space. Previously, customers have been keen on Linux for its perceived Total Cost of Ownership (TCO) benefits, but the assumption Linux is cheaper has become more controversial over time -- a fact to which Chandiramani readily assents.

Security and manageability may be the real gains in going Linux. Red Hat Enterprise Linux 4.0 has come out with some serious security enhancements assessed by the National Security Agency in the US that make Linux more secure and stable.

"Those things have made customers stick with Linux and invest more on open source solutions from Red Hat," he says.

TCO, after all, really depends on individual circumstances. It is easy to go from one vendor to another, with each one producing more or less valid research that seems to show their software offers better TCO than another brand.

"In my view, it’s really up to the customers to make their own evaluations. Although we do have some statistics showing that for some customers Linux can cost up to 80 percent less," Chandiramani says.

General resellers and system integrators could benefit from Red Hat’s subscription model, which meant up to 95 percent of the total solution -- services, hardware, middleware and applications -- was provided by Red Hat. The vendor also provides "hot customer leads" and does training and certification, he adds.

"Australia has been adopting open source for a while now and 2005 is when we’re going to see open source as major competition in projects and government," Chandiramani. "Any reseller or integrator that dismisses this opportunity will lose."

Strong words, but not without support. Government agencies in Australia have definitely got keener on open source-derived options this past year.

Ivan Kladnig, Linux business development manager at IBM Software, agrees. "Things are going fantastically well, I have to admit," he says. He’s hazy about actual numbers, but claims Linux at IBM has seen "tremendous" growth just in the last 12 months. "The market has grown around 40 percent, but I know we are well above that level," Kladnig says.

Customers are definitely migrating to Linux from Windows, as well as from Unix. In the government space, IBM has probably got about 150 implementations, including 12 locally, he says.

Many are deploying J2EE bases on top of a Linux platform, while Rational, Cloudscape and Eclipse applications and non-Linux add-ons such as Samba keep growing in popularity, he says. "And I think we have 50,000 developers on board with Derby. So there’s great interest in a number of areas on the open source front," Kladnig says.

IBM Software by the time this article appears will have announced business partner program changes to further drive open source into Australian IT.

"We recognise that business partners who make this investment need to have a program that offers them exclusive benefits and differentiation. As such, we are making changes," Kladnig says.

IBM partners can look forward to a new enablement and certification framework for Data Management, Lotus, WebSphere, Rational, Tivoli and Linux. Margins and incentives for partners that get certified will also be boosted, as will sales, marketing and technical support, Kladnig says.

Martin Gregory, a platform strategy manager at Microsoft, argues that even the software giant often seen as the bete noire of Linux has several fingers in various open source-related pies. "We have a number of open source products up on SourceForge. Obviously, we do compete with some of the products that fall out of that open source process – OpenOffice, Linux and Samba," he says.

That said, the biggest thing Microsoft saw in the past 18 months was the commercialisation of the Linux space. He asks -- with good reason -- if it really makes sense to talk about open source any more, particularly in relation to commercial distributions such as Red Hat. "And now SuSE is owned by Novell," he says.

Where resellers are concerned, the industry has largely outgrown the entire debate, although there are still Linux distributions such as Debian that use a social charter as their primary motivator. There will always be a place for that kind of open source, and for the "true" open source that exists largely beyond the channel’s reach a kind of creative alternative.

Gregory points out that Red Hat cares about the same stuff Microsoft cares about -- making money. He acknowledges the complaints about security, and the onerous, never-ending task of patching current Microsoft applications. But, he says, would it be better to pretend that patching did not need to occur?

Microsoft is working hard and throwing considerable resources at improving security and finding a way to simplify the patching issue. After all, if it fails to keep customers happy, the game will be lost to those that can do a better job, he says.

It’s also true that Linux distributions have far more vulnerabilities and hack attacks targeting them than is widely recognised, Gregory says, pointing to overseas research by the likes of Mi2G in the UK. "It’s very important that you compare apples with apples," he says.

Gregory can of course quote his own studies, that show VARs and other channel partners can earn as much as 3.5 times more revenue from Windows products than selling Linux products. "And 180 percent more profit growth," he says.

What is clear is that there is no winner. It will be apples for apples, and horses for courses, for a long time yet -- perhaps forever.