IBM Launches Linux E-Business Platform for Smaller Firms

IBM's new Linux e-business initiative targets small to midsize businesses (SMBs). But IBM must assure prospective customers that long-term reseller support and more applications will be available.

On 9 May 2002, IBM announced the eServer Integrated Platform, which uses the Linux operating system for deploying e-business applications. This offering targets SMBs with 100 to 1,000 employees. The eServer Integrated Platform includes:

• eServer xSeries hardware
• WebSphere Application Server
• DB2 database software

IBM will preconfigure 12 blueprints, or templates, for infrastructure (six with DB2, six without) that IBM's U.S. Business Partners can then sell. Each blueprint encompasses:

• Security
• Web serving
• Database
• Directory
• Switching

IBM’s entry into this market will likely not deliver tangible results (e.g., $1 billion in annual revenue) until at least year-end 2004, but the move indicates IBM’s new aggressiveness in setting long-term marketing goals. IBM hopes to:

• Pre-empt the competition — IBM can still rely on Windows, but Microsoft may become increasingly annoyed and more attentive to Dell Computer and Hewlett-Packard, which market Linux to enterprises less aggressively.
• Shift more revenue to IBM software (against SQL Server).
• Increase retention and loyalty through its software stack.

So far only seven independent software vendors (ISVs) and distributors provide application support — they mainly target Internet e-commerce and intranets for WebSphere and DB2. Therefore, IBM must invest heavily in its partner programs to generate momentum. IBM plans to use its Linux Technology Center and provide integration and regression testing; then it will hand the customer-facing integration to its resellers. IBM, the reseller, the Linux distributor or a combination can provide support. While SuSE will supply the distribution (Red Hat to follow), Linux distributors will not gain substantial revenue other than from the effect of IBM endorsing Linux for SMBs.

To succeed, IBM must reassure SMBs that Linux will be around for the long term, that reseller support will remain constant and that the application pool will grow. SMBs should take none of these factors for granted, nor has IBM proven that the new offerings decrease total cost of ownership. Thus, most SMBs should compare costs with IBM's and other vendors' Intel platforms on alternative operating environments and solutions.

Bottom Line

IBM has broadened its operating environments for SMBs, but this move may add confusion. IBM now offers the iSeries with native OS/400 applications, Linux applications running in an iSeries partition, xSeries with Windows and xSeries (x330 and x660) with preconfigured Linux solutions. The Linux play requires ISV support, which continues to lag. The uncertainty may deter thousands of Windows value-added resellers from shifting gears and incurring the added expense of Linux training and application support.

Analytical Source: George Weiss, Gartner Research

Reference Material and Recommended Reading

• “Why ISVs Have Not Yet Joined Linux En Masse” (SPA-16-0079). ISVs must be assured that the incoming revenue stream will more than offset the costs, especially since most ISVs support at least two or three other operating systems. By George Weiss
• “IBM Uses Linux to Capture More Mainframe Workloads” (FT-15-3528). Only customers ready to commit to Linux should consider this new package because this three-year offering has no exit upgrade path for the hardware to the z900. By Mike Chuba and John Phelps

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