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Monday, December 23, 2002 - 12:00 a.m. Pacific Free Linux operating system wins some big-name fans By Kim Peterson Seattle Times technology reporter Zumiez, an Everett-based clothing and equipment store, is all about tracking the coolest in skater gear and teen fashion. But when it came to picking a computer system this year, the company was more concerned with saving money. Zumiez had been using the Unix operating system to power its cash registers, but the cost — about $1,000 at each of its 100 locations — was more than what the company wanted to pay. In lieu of Microsoft, which makes the industry's dominant operating system, the store's technicians turned to Linux, which was free. They installed the system by themselves and added internal e-mail, Web access and spreadsheets — which they didn't have before. "It was a good cost savings," said Zumiez technology director Lee Hudson. "The stores have a lot more tools than they thought they would." While Microsoft offers many of the same tools, Zumiez runs a simple network and wouldn't use all of Windows' features, said Hudson. "We just don't need the expense of a Microsoft system," he said. The computing industry might look back on 2002 as the year people got serious about Linux. The operating system has been gaining momentum as an alternative to Microsoft and proprietary versions of Unix, and 2002 was a breakout year for the technology. Linux hasn't quite reached mainstream status in business computing, but it's coming close. And it has become a major competitor to Microsoft. The reason? Linux's underlying source code — the guts of the system — is available for free. Developers can download it, tinker with it and customize it for a company's needs. And in a year when words like "monopoly" and "copyright" dominated much of the technology industry, "free" drew a lot of attention. No one owns Linux, although a growing number of companies are trying to make money by helping people integrate it and by selling compatible software. The technology sprung from — and now leads — the movement toward freely-shared, open-source software. Microsoft welcomed Linux the way some people welcomed disco — mocking it, berating it and gradually accepting that it could be here for a while. Chief Executive Steve Ballmer likened open-source software to cancer last year, but the company has since toned down its stance. These days, Microsoft is aggressively insistent that Windows costs less than Linux for the total package — including tech support and other factors. We offer a few other signs that 2002 was Linux's breakout year: Moving into retail Big-name retailers and automakers adopted Linux on computer systems, in most cases replacing Unix. Movie-theater operator Regal Entertainment Group rolled out a Linux system at its concessions stands in September and is testing a Linux-based kiosk for ticket purchases. Sherwin-Williams, the paint dealer, launched Linux in May throughout its 2,500 stores in North America. Chrysler and other automakers turned to Linux computers to analyze crash simulations. Building momentum were stories from companies like Amazon.com, which said third-quarter 2001 technology costs dropped 24 percent to $54 million compared with the year before. The company attributed part of the savings to switching to Linux. Linux hits PCs It's hard to find many Linux-based personal computers at stores like Circuit City; the PC landscape belongs to Microsoft Windows, with fewer than 10 percent of users favoring such alternatives as Macintosh. But this year, Linux-based PCs from such companies as Lindows.com went on sale for as low as $199 at Walmart.com, the Web site for the discount retail giant. (That price doesn't include a monitor or modem.) Linux advocate Blake Couch, who surveys computer users about Linux on his Web site, www.wewantlinux.org, called it a watershed moment. "You get name recognition and visibility when people like IBM, Hewlett-Packard and even Sun are seen to be backing Linux," he said. "But now we're talking small-town, mom-and-pop kind of stuff when you're talking about Wal-Mart." Microsoft is watching Amid the movement, Linux has become a huge discussion topic at Microsoft, according to analysts with Seattle investment firm McAdams Wright Ragen, who visited Microsoft executives recently. "Linux was described as a huge threat, and as something that every senior executive thinks about every day," according to a Dec. 11 report by analyst L. Alan Davis. Add to that observations by Rick Belluzzo, who resigned in April as Microsoft's president and chief operating officer. In an interview with trade magazine Computerworld, Belluzzo hinted that a common reaction to the subject of Linux within Microsoft was to "jump up and scream." "Linux is clearly the biggest competitive challenge that Microsoft has ever faced," Belluzzo said in the interview. "It's unlike anything before — there's not a company behind it. It's very elusive, in a way." Publicly, Microsoft has toned down its rhetoric toward Linux. The company even attended this year's LinuxWorld trade show. Peter Houston, Microsoft's chief server strategist, said the company had previously taken an "emotional" view of Linux. "I don't think customers really want us to come out and talk about what's wrong with Linux," he said. "They want to talk about how Windows solves their problems." To be sure, Microsoft has gone from bashing its competitor to portraying itself as ultimately less expensive on a "total cost of ownership" basis. The idea: It's cheaper to maintain and fix a car that most mechanics know about, such as a Toyota, than one few people drive. In a report commissioned this year by Microsoft, the research firm IDC found that Windows costs up to 22 percent less than Linux over a five-year period. Most of the cost differences were due to staffing, the report said, because more work is required to support Linux systems. IBM sees returns Companies such as HP and Sun continued to integrate Linux into software and other products this year. Wednesday, rivals Matsushita and Sony announced a partnership to develop Linux for digital home devices, such as televisions. IBM has made huge investments in Linux, with 250 of its developers working full time on the operating system. The company committed $1 billion last year to the technology, and the strategy seems to be paying off. The company's Linux sales hit $216 million in the third quarter, up 83 percent from the same period the year before and 31 percent from the previous quarter, according to research firm Gartner. IBM is so entrenched in Linux that it could dictate the operating system's future — in ways likely to suit its own needs, said Houston at Microsoft. "In a very real sense, IBM is the face of Linux," he said. Meantime, it seemed that nearly everyone who rode Linux's coattails in the server market saw returns. Linux revenue grew to $548 million in the third quarter, up 65 percent from the year before, according to Gartner. That trend has caused other companies, such as graphics chipmaker Nvidia, to broaden its line of Linux-compatible products. "One of the main reasons that a lot of people move to Linux is they want to save money," said Nvidia software product manager Andrew Fear. Cutting into Unix Linux seems to be taking more business from the Unix market than from Microsoft, analysts say. "I'm not sure that there's a direct fight between Linux and Microsoft yet," said Michael Cherry, an analyst with Directions on Microsoft. The key word is yet. Aberdeen Group analyst Bill Claybrook expects Linux to leapfrog Windows and replace Unix on commercial operating systems within seven or eight years. "Linux is so appealing because it isn't owned by anybody," he said. "You don't have to deal with a monster like Microsoft. You don't have to hassle with a company over contracts and licensing." Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com. Copyright © 2002 The Seattle Times Company