Big Blue and the penguin strengthen bonds

If IBM can push 40,000 Linux desktops in the market, there is little scope to doubt its allegiance towards open source. But would it not be true to say that Big Blue is discarding a great source of revenue by offering Linux as an alternative to Windows NT4? SHIPRA ARORA wonders aloud

YASIR YOUSUFF says that most customers have varied application requirements and need hybrid IT environments to run their businesses

IBM showed great commitment to promote Linux in a recently-unveiled programme where it proposed Linux as the only alternative for migrating from Windows NT to run enterprise software. Whatever IBM’s strategy—whether to get its software to help push Linux OS sales or the other way around—the fact is that Big Blue seems to have scored a double hit by luring customers with its discounted software offer as part of Windows NT to Linux migration.

Microsoft, facing the daunting task of migrating its existing Windows NT user base (estimated worldwide to be around two million customers) to Windows 2003, is now running the risk of a portion of this huge base getting lured away not only from its operating system but also its software. IBM will offer discounts and special programmes for DB2 and Lotus Domino running on Linux for any IBM eServer to customers moving from Windows. In case this is successful, the programme will directly impact Microsoft SQL Server and Microsoft Exchange.

Sandeep Menon, Linux Business Manager, IBM ASEAN/SA, sounds optimistic about the programme’s adoption in India. He says, “We have come out with this offering based on the rising demand that we saw from our customers. While it would not be realistic to throw up percentages, we believe that there is going to be significant traction for this offering from a broad range of customers.”

IBM vs Microsoft

Microsoft refuses to generalise IBM’s case as an indication that others will follow suit. Yasir Yousuff, senior marketing manager, Microsoft India, says that his company has serious partnerships with several vendors who offer customers a range of options. These options also include Linux, and the vendor’s platform recommendation (Windows, UNIX, Linux) is based on customer needs. “There are some vendors like IBM for whom the services part of their business offers greater returns, and therefore they have a higher level of interest in Linux-based solutions,” he says.

But considering IBM’s premium position in the server market in India, its aggressive Linux push will certainly put some strain on Microsoft’s business here. However, there is a catch for IBM too. IBM is also a Microsoft partner for the NT Migration programme. This leaves it with the daunting task of striking a fine balance between its two diverse strategies, a factor that will determine the success of its Linux migration programme to a great extent.

SANDEEP MENON affirms that if customers want to migrate to Windows 2003, IBM is ready to support them

NT on the way out

Microsoft had announced in 2001 that it would discontinue the Windows NT platform. Support, fixes and security patches for the OS will be stopped by this year-end. This leaves existing NT users open to many options. Out of these, the two most feasible ones are to migrate to Windows 2003 or to Linux. According to both Microsoft and IBM, the migration path will be ultimately driven by the customer’s choice. Yousuff says that most customers have varied application requirements and need hybrid IT environments to run their business. “Hardware platform vendors therefore need to ensure they offer their customers the choice.”

While IBM will continue to service both Windows 2003 and Linux, its Linux leaning is evident. This is subtly hinted at by the company’s extra efforts to push its own software sales with Linux at a discounted rate. This strategy is largely being driven by customer demand. Menon says that if customers want to migrate to Windows 2003, IBM is ready to support them. But he also points out that IBM has come out with its Linux migration offering based on the upswing of demand. “We see migration to Linux as a popular demand from many enterprises,” he states. IBM particularly sees the government and public sector, financial services, telecom and EDA (electronic design automation) industries to be the first movers as the advantages that they gain are tangible and significant.

Experts point out that IBM’s Linux tilt is explained not only by growing customer demand but also by its desire to increase its software user base. Customers migrating from Windows will provide IBM the ideal ground to popularise and drive its database and messaging software at the cost of Microsoft. Quoting IDC 2002 figures, Microsoft claims that where MS Exchange accounted for 60 percent of enterprise business across industry verticals, Lotus garnered less than 10 percent of the enterprise market.

Special programmes are being offered for migration from Microsoft SQL Server to DB2 Universal Database on Linux, and for security and network management migrations. In terms of solution segments, IBM is expecting strong demand from Internet and network management, office automation, Web serving, mail serving, workgroup and database servers.

Microsoft dismisses the discounting part as a standard marketing gimmick. Every IBM RS6000 (p series) IBM PC server (later Netfinity server and today’s x series) and AS/400 (today’s i series) has shipped Lotus Notes (later Lotus Domino) free. “It is interesting that they are now discounting a product that they have been traditionally offering to customers for free. How do you offer discounts on Rs 0?” asks Yousuff. Microsoft, in fact, cites examples of a few Indian customers migrating from Lotus to Exchange, including Ashok Leyland, Intelligroup, Perfetti, TVSE and Aptech.

Can Windows 2003 overpower Linux?

Microsoft considers its offering as an USP that is going to drive customers towards its migration programme instead of any Linux migration programmes. The company claims that Windows provides greater value over Linux in both the short and long term. Microsoft’s strategy is, however, not restricted to a reactive approach to competition. It has outlined a proactive strategy to shift its NT user base to Windows 2003. To this effect, Microsoft, along with its partners, has put a solid publicity programme in place. The company informs that its OEM and Global Systems Integration (GSI) partners already have in-depth NT4 migration programmes in place or will have one in the months to come. These partners include IBM, HP, Dell, Accenture, Avanade, BearingPoint, CGE&Y, CSC, EDS, EMC, Fujitsu, Getronics, Infosys, PWC, Satyam, TCS, Unisys and Wipro. It was based on customer feedback that in January 2003 Microsoft decided it would continue Windows NT Server 4.0 pay-per-incident and security hotfix support through December 31, 2004.

Deciding factors

One of the factors that customers will look at closely is the cost of migration from Windows NT to Linux vis-à-vis Windows 2003. IBM refused to comment on the exact migration cost involved. But there are a number of factors that are considered in estimating migration costs. Even though the migration cost may be one-time, savings in terms of licencing and maintenance fees could accrue over three to five years. It is also important in the process, functionality and efficiency are enhanced. Given these requirements and varying types of customer environments, specific factors are considered, including effort estimates, man-hour costing, downtime costs and effects, security and functionality requirements, licencing fees, maintenance costs, application support with licence and transfer fees, floor space, people costs, scalability for growth, long term roadmap, etc.

Conclusion

While it is true that Microsoft has got some big name customers back into its fold, it is not enough to convince everyone that IBM’s push to Linux will have no impact on Microsoft. Rather, IBM’s decision to portray Linux as the most viable alternative for NT users is a big gamble that can significantly build or damage this line of business for Big Blue.