Slowly but surely, this Windows alternative is marshalling strength in the middle market.
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by Richard McCausland
Protesting too much?
Taking its case to the enemy camp, Microsoft chose the recent LinuxWorld expo in New York City to officially launch its "Get the Facts" campaign. Amid booths promoting the wares of such Linux stalwarts as IBM and Sun and Oracle, Microsoft vigorously argued that its Windows operating system provides a total cost-of-ownership advantage over the Linux upstart.
Materials accompanying the new campaign include benchmark studies, market research reports, and no fewer than 44 case studies detailing Windows installations at small, medium-sized, and large companies (see sidebar, page 38). Among several points, Microsoft contends that, in a higher-end enterprise environment, Windows 2000 has the cost edge over any Linux competitor in network infrastructure, print serving, file serving, and security applications.
To be sure, when it comes to operating systems, Windows remains king of the hill. According to a recent IDC study, Microsoft will continue to dominate the worldwide operating environments market at least through 2007, despite continued competition from Linux. In 2002, Microsoft represented more than half (55.1 percent) of new license shipments in the worldwide server environment, and a whopping 93.8 percent of shipments in the client environment.
But Linux is gaining ground on the Microsoft juggernaut. Al Gillen, director for IDC's System Software research, comments, "Linux was the only other bright spot in 2002, with that operating environment posting both revenue and shipment volume gains."
Developed in 1991, Linux is an essentially free operating system that has steadily accumulated applications support from a worldwide development community linked via the Internet. It is targeting both the server environment--where it represents an impressive 23.1 percent of new license shipments according to the IDC data--and the desktop.
Acceptance of Linux is growing dramatically in the middle market, according to Ron Ross, owner and president of Linux specialty house Magstar, based in Toronto. He recalls, "When we first rolled it out, it was a bit of a detriment. People would ask, 'If it's free, can it really work? Should I bet my business on this?' Those are the questions we got. We no longer get those questions."
Instead, "we have no difficulty whatsoever" getting prospects to consider using a Linux-based solution, says Ross. "In fact, it's welcome."
Pleasanton, Calif.-based Accpac International last year began offering IBM's DB2 Universal Database, which supports Linux as well as Windows, as a standard component within the Advantage Series of accounting software modules. That bundling arrangement has since been expanded to the open-source-code Pro Series and to Accpac Customer Relationship Management.
"It's our hope to extend that [arrangement] to our other applications," such as warehouse management and human resources, notes Accpac product management vice president Craig Downing.
A Snugger Security Blanket|
Linux enthusiasts brag about its superior security performance vis-a-vis the successful virus attacks launched against Microsoft Windows with alarming frequency. One company, however, thinks there's still room for improvement.
Linux scored probably its most significant commercial breakthrough last year when Wal-Mart began offering Microtel personal computers fueled by the SuSE and Lycoris flavors of the Linux operating system. Available only online and not in Wal-Mart stores, these systems sell for as little as $200. The mega-retailer has since added the Linare Model AD 1300 Linux PC.
Without disclosing figures, a Wal-Mart spokeswoman comments, "Sales of Linux-based systems have been and continue to be strong." She adds, "We think that's due in large part to word of mouth."
Decade of Linux Involvement
Open Systems Accounting Software has run on multiple platforms, including Linux, since 1994. This past October, OSAS formally received Red Hat Enterprise Linux v. 2.1 certification. Without citing figures, David Link, vice president of development for Shakopee, Minn.-based Open Systems, reports that "sales of OSAS on Linux have increased significantly" this past year over the prior year.
The increase in Linux-related business is due in part to sales of Toshiba Linux-based Magnia SG25/SG30 appliances preloaded with OSAS. With prices starting at $1,995, businesses can purchase a "wireless network-in-a-box" that includes an office server, Internet gateway, router, printer, switch, printer server, storage--and, of course, accounting software. Open Systems makes a point of telling prospects that they won't need to pay a network consultant to set it up, nor will they need to buy more licenses for networking or database software.
Salado, Texas-based TBC International, an Open Systems reseller, is making a specialty of Linux installs. President Richard Thomas acknowledges, "Changing operating systems is a fairly major activity for a client to do. They're not likely to make that decision on a whim." But making that decision they are--oftentimes in favor of Linux, at the expense of Windows.
Even smaller businesses, Thomas explains, need to keep in touch with multiple locations and/or field sales staff, and there's a growing demand for anytime/anywhere systems access. With Citrix MetaFrame and comparable network services still "fairly pricey" for smaller firms, they are at least willing to hear about Linux alternatives. Also, hikes in Microsoft licensing fees are "starting to drive decisions" in favor of Linux, according to Thomas.
RSA Micro Tech, a Marysville, Wash.-based producer and distributor of industrial fertilizers, decided to make the jump from Windows NT to Red Hat Linux. The decision was driven by a need for greater connectivity between its four production facilities and headquarters.
Specifically, RSA was having difficulty managing inventory for "on demand" orders, which can comprise up to half of all annual order volume, since the order processing function was centralized in the home office. Also, the company was facing the challenge of complicated reporting requirements that differ from state to state.
The wide-area connectivity offered by Red Hat Linux has enabled RSA to disperse order processing back to the production facilities. "Now they do their own data entry, run their own variance reports, and are able to investigate variance when it occurs," says RSA corporate controller Ralph Rogers. "Inventory runs smoother because when something is out of line in inventory, they know about it first and can check it."
Opting for Linux has also meant cost savings, according to Rogers. "We didn't have to invest heavily in T1 lines and stuff that causes infrastructure costs to go up," he notes. There are also the savings that result from avoiding penalties assessed by states for not reporting on time.
Appgen Business Software, another early Linux adopter with its cross-platform Custom Suite of business applications, was recently bought by Tacoma, Wash.-based Aptus, which plans to offer the Appgen functionality to financial professionals via its e-Accounting online hosting service. Aptus currently provides QuickBooks Pro hosting, Web hosting, and online document management among other services.
"Aptus is working with a number of other [hosting] properties to further extend the reach of Appgen," says executive vice president Joanie Mann. She credits the Appgen Custom Suite with fostering "a very flexible database environment," as well as building a "significant" installed base.
"With online QuickBooks and now the Appgen suite, this starts to roll into a pretty powerful package," says Mann. She sees "a significant but easy migration path" between the two, which should prove especially attractive to businesses that choose to run on non-Windows systems. "There are an awful lot of Linux shops out there," she notes.
Watch Out, Penguin! Microsoft Fires Back
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