China DOS Union

Linux's Infinite Appeal



　　On February 23, 2003, the "Linux Classroom" launched by China Education Media Co., Ltd. was successfully held at the Hefei Science and Technology Museum with the cooperation of Hefei Nuoji Technology & Trade Co., Ltd.! The next day, at the invitation of Hefei Shijie Computer School, the Linux Classroom was once again warmly welcomed by Linux enthusiasts in Hefei. On February 27, the "Linux Classroom" moved on to Jiujiang, Jiangxi, and was held that evening at Jiujiang College, drawing back the curtain on Linux's launch into the Jiangxi market.

　　At the Hefei Linux Classroom, more than 200 people gathered at the Hefei Science and Technology Museum, including leaders from relevant local software industry associations, Linux experts, main persons in charge of Hefei IT enterprises, and teacher and student representatives from key Hefei colleges and universities. Detailed introductions were given on current Linux system software trends, the background and development direction of Red Flag Linux, new applications of the Red Flag Linux operating system, the Red Flag Linux certified training support service system, and Red Flag Linux courses.

　　The Linux open classes held at Jiujiang College and Hefei Shijie Computer School were specially aimed at students, and both events were enthusiastically welcomed by them. In class, the students responded very strongly and actively asked questions, greatly increasing Linux's influence in colleges and universities and even in society.

　　This event was another rather successful one following the Linux open activities held in Ningbo and Hangzhou at the end of 2002! It fundamentally laid the groundwork for Linux development in Anhui and Jiangxi, and made an effort toward advancing our country's software industry!

BusinessWeek cover article: The IT industry enters the Linux era
　　Introduction: The March 3 issue of BusinessWeek, in its cover story "The Rise of Linux," points out that the booming Linux movement launched by amateur volunteers has dealt a huge blow to the traditional computer industry, and that Microsoft and Sun are facing a severe Linux crisis. Directly confronting Linux seems unlikely to end well. An IBM Software Group manager exclaimed that the Linux era has arrived.

　　Nicholas Walker is a typical "digital nomad." Like many wandering singers of years past, he left school early. Only 18 years old and still a high school student, Walker sometimes traded his software programming skills for a temporary place to stay or a little pocket money. From programmers' conferences in Istanbul to the famous Artificial Intelligence Lab at MIT, he has left his footprints everywhere. Walker's youthful and sincere appearance tells the world: I am an idealist. His idea is to share his software innovations with others. Passing through his parents' hometown of New Hampshire, Walker said, "I'm uncomfortable with making money by selling things I've made."

　　Walker found kindred spirits in a high-rise office building in Manhattan. Jeffrey M. Birnbaum, managing director of computing for Morgan Stanley's institutional securities division, is 37 years old and a typical IT white-collar worker. Yet it is precisely this man, living inside the capitalist machine, who thinks very highly of the work Walker is doing. Birnbaum is convinced that Morgan Stanley's future technology will rest on the so-called "open source" projects in which Walker is involved.

　　Birnbaum is currently busy replacing traditional Microsoft Windows and Sun Solaris operating systems with the low-cost open-source program Linux. He will replace 4,000 high-end servers currently running traditional software with inexpensive Linux machines. This five-year project will save Morgan Stanley $100 million. So does he resent the fact that the core of Linux technology is in the hands of counterculture youths like Walker? He says, "We've noticed their work. It's good."

　　Just as the technology world seems to be in decline, a powerful trend is emerging. Unknown open-source volunteers linked together through the Internet are bringing about a revolution in the way software is produced. Their central masterpiece is Linux, an operating system that can run on everything from IBM supercomputers to Motorola mobile phones. Because of its open nature, Linux can be downloaded free over the Internet, though in most cases it is distributed as part of software packages bought by enterprises.

　　The structure of the computer kingdom is about to change completely. Just imagine the enormous shock to the energy market if new participants could provide gasoline, and you will understand it. Linux is producing a similar shock in the technology field. The real question facing every tech company is how to make use of Linux, or how to avoid being hit by Linux. Don't think Linux's penguin logo looks so cute that it has no destructive power; in fact, it is shaking the established balance of the computer industry. To Microsoft's dominant position, Linux has become the greatest threat since Netscape in 1995.

　　Linux becomes a mainstream product

　　Backed by technology giants Intel, IBM, HP, and Dell, Linux is increasingly becoming a mainstream product. From DaimlerChrysler to the major securities brokerages on Wall Street, Linux has already secured its place. From nearly zero market share three years ago, Linux has now taken 13.7% of the $50.9 billion server market. Market research firm IDC predicts that by 2006 Linux's market share will rise to 25.2%, putting it in second place. IDC predicts that the long-dominant Microsoft will stop its long-standing growth trend starting this year and gradually shrink. At the same time, Linux has also found uses in the home electronics field, including Sony's PlayStation video game console and TiVo television program recorders. Steven A. Mills, a manager in IBM Software Group, said, "Has the Linux era arrived? The answer is absolutely, positively, unequivocally—Yes!"

　　No one would have expected this day to come. Even Linux founder Linus Torvalds did not foresee it when he wrote the first Linux in 1991 as a simplified Unix version. Torvalds regarded Linux as a toy for computer hobbyists to amuse themselves with when they were dissatisfied with products from big companies like Microsoft and IBM. Torvalds himself is gratified by today's situation: "If someone had told me 12 years ago that this would happen, I would have been stunned."

　　How did Linux become a mainstream product? A powerful triple force brought about the current situation. First, thanks to the collapsed economy. Companies face strong pressure to cut technology spending, so they began seeking cheaper alternatives. Second, personal computer processor leader Intel loosened its close relationship with Microsoft and began producing Linux chips. This enabled enterprises buying related products to get computing power truly worth the money. Third, complaints about Microsoft have been growing, and enterprise users worry that Microsoft's monopoly position amounts to a kind of extortion. John A. McKinley Jr., global technology executive vice president at Merrill Lynch, said that they focus on Linux in hopes of maintaining a certain degree of dynamic competition. That gives them more choices. Some of Merrill Lynch's main securities application systems are now running on Linux machines.

　　Microsoft's distress

　　Microsoft is taking the Linux challenge seriously. Although Microsoft still holds a monopoly in desktop operating systems, Linux has already taken an important place in the server market, the major growth area that controls much of the Internet. Microsoft chairman Bill Gates and CEO Steven Ballmer refused to comment on this issue. But James Allchin, group vice president in charge of Windows business, regards Linux as Microsoft's number one competitor, even more competitive than IBM and Sun. Because Linux is free, Microsoft's old method of crushing rivals over the past 20 years through price-cutting no longer works against it; instead, Microsoft itself is under price pressure from Linux. But Microsoft insists that Windows is more reliable than Linux, and believes that commercial software teams will continue to produce innovation, such as tablet computer technology.

　　However, disappointment remains high. Microsoft's chief strategist Craig Mundie even believes Linux will have a harmful effect on the technology industry. Linux may lead society to overlook the value of intellectual property.

　　His view is that the computer industry is built on a simple logic: companies invest in developing software, sell it, and then reinvest part of the revenue in developing better software. Now, because of the open-source idea, that revenue stream is under threat. In fact, it is not just because the Linux operating system is free. Before using open-source software, technology companies must also sign a license agreeing to disclose innovations they achieve in that field. Eric von Hippel, a professor at the MIT Sloan School of Management, does not think the software industry will disappear; only the industry's structure will change. Software companies will have to make money in other ways, rather than from operating systems.

　　To survive and prosper in the new market structure, technology companies will have to operate differently. They can build their business around selling services, like IBM, or produce software products that can run on Linux, like Oracle's database. Dell, meanwhile, is completely removed from the software business, thus avoiding the harm caused by Linux while fully taking advantage of its benefits.

　　In the long run, the open-source movement will threaten most areas of the software industry. It is true that because volunteer programmers lack professional expertise, complex commercial application software may be beyond their abilities. But basic open-source database and email products have already appeared. What happens if enterprise customers begin participating heavily in this kind of development? Although no one knows how far open source can go, it really can reduce the profits of technology companies.

　　Winners and losers

　　Like all transitions, the Linux phenomenon will create corresponding winners and losers. Among the winners is IBM. IBM is good at high-performance computing, and it now sells more Linux servers than any other computer company—twice as many, in fact. Intel, meanwhile, has used Linux as a springboard into high-performance computing. Dell has also introduced inexpensive Linux servers and sells them directly to enterprise users over the Internet.

　　Although Microsoft suffers losses because of Linux's existence, this trend seems to hurt Sun even more. With prices only a fraction of Sun's and similar performance, some Sun customers are switching to Linux machines. For example, online stock trading site E*Trade Group replaced 60 Sun servers priced at $250,000 with 80 Intel Linux servers priced at only $4,000 each.

　　Possible obstacles for Linux

　　What can limit Linux? The biggest possibility is intellectual property issues. The Linux operating system is based on Unix, and Unix patent owner SCO Group has already announced plans to set up a certification department and hire top lawyer David Boies to raise property-rights issues against Linux vendors. Another potential possibility is that Linux has multiple commercial versions. If these versions develop into several fundamentally different operating systems, application software companies will have to develop different versions for each Linux operating system.

　　However, none of this is likely to hinder Linux's development very soon. Patent issues will not stop customers' enthusiasm, and Linux vendors also advocate keeping their respective versions compatible. Recent Goldman Sachs statistics show that 39% of large enterprises are now using Linux, and analysts expect updated versions to attract even more enterprise buyers this year.

　　Linux history

　　The Linux phenomenon is spreading as fast as water, seeping into every remote corner and crack of the market. This is exactly thanks to Linux's original design philosophy. When Torvalds was still a graduate student in Finland, the Linux he wrote was compact and flexible, and could be applied in many areas. He also decided to share this new technology freely with others. The idea was: take it, build something, and share what you build. August 25, 1991 seems to have been a lucky day, because that was the first time Torvalds released the core Linux program he had written on the Internet. In the following weeks, dozens, then hundreds, of people from all over the world—Japan, New Zealand, and the United States among them—sent encouraging messages, patched the program, or added new features. He fostered a lively grassroots community, and these believers in open-source software principles helped him expand Linux into a global phenomenon.

　　Torvalds, now 33 years old, is still the conductor of this digital orchestra called Linux. He has the final say on upgrades to the program, and does not mind being called the "benevolent dictator" of the Linux continent. Recently, Torvalds has been busy writing programs for chip startup Transmeta. He is constantly moving from one Linux conference platform to another. But he prefers behind-the-scenes work, such as writing code and communicating with comrades in the trenches by email. In his spare time, he stays with his wife Tove and their two daughters. Tove has won the Finnish women's karate championship six times. Although he cannot make money directly from Linux, he got enough cash to live on by selling shares provided by Red Hat in 1999 during the boom years. He maintains that a good programmer seeks happiness, not merely survival.

　　Big companies will lead Linux development

　　But Linux's continued prosperity will depend to a large extent on technology giants. Big companies including IBM, Intel, Oracle, and Dell have already begun strongly backing this new thing, and have already provided proof of its reliability to technology buyers. Intel is interested in strengthening its role in the server market. Since holding a Wall Street Linux conference on December 6, 2001, the company and people on Wall Street have gradually persuaded storage specialist VERITAS Software and financial information service provider Reuters Group to begin supporting Linux. Lehman Brothers CTO Bridget E. O‘Connnor has expressed admiration for Intel's progress in the Linux field.

　　As it happens, Linux fits the strategic mission of many industry giants. Back in 1999, when current IBM CEO Palmisano was still head of IBM's server group, he asked his subordinates, "What is the next major trend in the server field?" The answer was: Linux! So Linux naturally became a pillar of IBM's strategy. The next year IBM invested $1 billion in Linux software development, with 250 engineers involved in Linux projects. Now IBM and Linux are inseparable. IBM has 4,600 Linux users. In the first half of 2002, 15% of the mainframes it produced ran Linux. In the fourth quarter, IBM's Linux server sales reached $160 million, equal to the combined total of HP and Dell.

　　Handling Linux the wrong way can bring terrible consequences. Sun is a case in point. Orders are flowing away from the company toward competitors that embraced Linux first. Goldman Sachs believes that, at least in the near term, Linux hits Sun the hardest. Sun adopted a parallel strategy: first making sure its Solaris software stayed ahead of Linux on servers, while also producing some low-end machines running Linux. This hesitation has already left Sun far behind its competitors in the Linux field. Not until the fall of 2002 did Sun launch its own Linux server. In the fourth quarter, Sun's Linux server sales in the United States were only $1.3 million, while Unix server sales during the same period reached $675 million.

　　Sun uniquely believes that Linux's main threat is in the desktop field, and so it introduced a Linux desktop. Even more laughable, it hopes to rely on its own StarOffice software to replace Microsoft. But analysts believe that because Microsoft's Office software holds an absolute monopoly, consumers are used to Microsoft's word processing and spreadsheet software, and getting them to switch will not be easy.

　　Big companies seem ready to unify the Linux world. Startup companies simply cannot grow while surrounded by such powerful enemies. The only real success story is Red Hat. In the third quarter of last year, three years after going public, it turned its first profit of $305,000, with sales of $24.3 million. The company's success also benefited from distribution agreements with IBM, HP, Dell, and others. On February 11, it received permission to sell products to the U.S. Department of Defense.

　　Only large enterprises can stir up waves in the market. In the late 1990s many Linux startups emerged, but most sold products to .com companies. As the .com bubble burst, many such companies vanished as well. Especially in international markets, large companies can organize and operate huge sales forces. IBM once supplied Linux computers to 3,200 post offices in the postal system of one Chinese province.

　　Even if industry giants want to play the role of Linux resisters, the Linux movement will still go on. This trend seems unstoppable, and it is moving ever closer to a balance point. The key to success is to maintain peace between two extreme forces: the volunteers represented by Nicholas Walker, who code day and night to change the world, and the businessmen represented by Morgan Stanley's Jeffrey Birnbaum, who use the former's software to make money. It is a strange capitalist bond, but it may be an effective way.