IBM's new Linux e-business initiative targets small to mid-sized businesses, and the company must convince prospective customers that reseller support and the number of applications will keep growing.
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IBM wooing smaller businesses to Linux
IBM's entry into this market will likely not deliver tangible results--for example, a given amount of annual revenue--until at least the end of 2004, but the move indicates the company's new aggressiveness in setting long-term marketing goals. IBM hopes to achieve the following:
Pre-empt the competition--IBM can still rely on Windows. Microsoft, however, may become increasingly annoyed and devote more attention to Dell Computer and Hewlett-Packard, which market Linux to businesses 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 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. The company 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 of the two can provide support. German Linux distributor SuSE will supply the distribution (Red Hat to follow), but Linux distributors will not gain substantial revenue other than from the effect of the technology giant endorsing Linux for smaller businesses.
To succeed, IBM must reassure smaller businesses that Linux will be around for the long term, that reseller support will remain constant and that the application pool will grow. Smaller businesses should take none of those factors for granted, nor has IBM proven that the new offerings decrease total cost of ownership.
IBM has broadened its operating environments for smaller businesses, but in so doing may be breeding confusion. It 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 pre-configured Linux solutions. The Linux effort requires support from independent software vendors, 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.
(For a related commentary, on what IBM is doing with Linux in the mainframe arena, see gartner.com.)
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