Free operating system goes from a curiosity to an invader in Microsoft's domain

By Hiawatha Bray, Globe Staff, 08/12/99

SAN JOSE, Calif. - Linux isn't just a hobby any more.

Most of the thousands of visitors to the LinuxWorld Conference & Expo here are serious computer users looking for software to solve real-world business and technical problems.

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And many of them think they've found the answer in Linux - an upstart operating system that was virtually unknown just a couple of years ago but now poses a serious threat to the near monopoly in desktop computing software held by Microsoft Corp.

In simple terms, an operating system is the program that controls the most basic functions of a computer such as reading information from disk drives. The Linux operating system is available at little or no cost, as is its underlying ''source code'' - the actual coding written by the programmers.

As a result, people around the world can freely use, modify, and improve Linux, without having to pay royalties to a commercial software company like Microsoft.

It hardly seems like the basis for a lucrative business. Yet the talk of the show is the astonishing runup in the value of shares in Red Hat Software Inc., a leading Linux provider. One of the best-known names in the young Linux industry, Red Hat makes its money by selling an easy-to-install version of Linux for those who do not want to go to the trouble of downloading the operating system for free. Red Hat also provides technical support to users.

Investment bankers priced Red Hat's stock at $14 a share for its initial public offering yesterday. But the stock more than tripled during the day, with shares rising 38 1/16 to close at 52 1/16 on the Nasdaq exchange. The company, based in Durham, N.C., ended the day with a market value of $3.48 billion.

Meanwhile, many of the world's leading computer companies, including IBM Corp., Compaq Computer Corp., and Dell Computer Corp., have flocked to the San Jose Convention Center to tout Linux-based products for electronic commerce and corporate network management. And one of the most famous men in high tech, Intel Corp. chairman Andrew Grove, made a surprise appearance to stress that his company's next-generation microprocessor series, Merced, will be tuned to run Linux with maximum performance.

Notable by its absence is software giant Microsoft, which finds itself squarely in the crosshairs of its most unusual adversary yet. Even Microsoft has expressed public concern about the competitive threat posed by Linux. Not only is it available for free, but Linux has also developed a reputation for being more reliable and stable than Windows for many uses. And many programmers like the fact that they can modify Linux themselves, instead of waiting for Microsoft to upgrade the product.

Microsoft has been touting recent benchmark tests that found its Windows NT operating system is better than Linux for some heavy-duty tasks. Backers of Linux vow that a planned upgrade of the software will fix these deficiencies.

Linus Torvalds, a Finnish computer student who created Linux with the help of a worldwide team of volunteer programmers led by the Free Software Foundation in Cambridge, said there have been few serious attacks from the Microsoft camp. ''It's been very mild so far,'' Torvalds said.

He believes that this is because Linux presents Microsoft with a unique problem. Microsoft has been able to fend off challenges by traditional software companies simply by using its financial muscle. In the case of browser maker Netscape Communications Corp., Microsoft rolled out a competing browser and gave it away free of charge. This made it impossible for Netscape to turn a profit by selling its browser, while Microsoft makes so much profit from other products that it could afford a loss on browsers.

But because Linux is produced by hundreds of volunteer programmers worldwide, and available for free, Microsoft's traditional weapons are of little use.

''I don't see what they can do,'' Torvalds said.

Overall, there has been little overt Microsoft-bashing at the convention - another sign, perhaps, of the growing maturity of the Linux market. Instead, visitors are concentrated on an array of new products for managing Internet commerce, Web site management, and networking issues.

The show floor was a stark illustration of the contradiction at the heart of the new Linux boom. Large and costly booths show off new software products, costing hundreds or even thousands of dollars, designed to run on top of an operating system that's available for free.

The free-to-all philosophy underlying the open-source movement is so pervasive here that it poses a constant challenge to companies that expect their Linux-based software to turn a profit. Charge for your software, and you provide an easy target for some other vendor who's willing to give away a similar program.

Consider the issue of ''clustering,'' a vital technology for commercial computing, but one area where Linux lags behind other operating systems.

With clustering, a group of computers can be linked together to perform a single task, like running a Web site. If any one of the machines break down, the others automatically pick up the slack. This capability is vital to the operation of corporate networks and Internet retail stores.

TurboLinux Inc. of Brisbane, Calif., announced a new clustering program designed to fill this need. Their product will cost $995 for a basic version, or $1,995 for a version that can be used with a larger number of clustered computers. But early this week there was news of a different clustering program that will be available for free.

VA Linux Systems Inc. of Sunnyvale, Calif., is mainly in the business of selling computers with preinstalled Linux. VA developed a clustering program for use with its new line of Web server computers, but will give away the software to anyone who wants it. Indeed, VA says it'll do the same with any software it develops for use on its own hardware products.

Cliff Miller, chief executive of TurboLinux, says he's not familiar with the VA software, but says his firm hopes to offer superior performance and features, which will persuade customers to pay for the software. Miller said that as long as some Linux users demand special features, there'll be room for sellers of ''closed source'' commercial software products. ''I think there's always going to be a market for bringing the best of both,'' he said.

Timothy Ney views the continuing commercialization of Linux with a wistful air. Ney is managing director of the Free Software Foundation, which developed most of the underlying software in Linux with the intent of giving it away. Now the foundation is consigned to a small, cluttered booth in the back of the exhibition hall, overshadowed by the more glamorous displays of the commercial computer firms.

On the one hand, the movement created by the foundation is booming. In the server market, Linux is winning new users faster than any other operating system. And IDG, the Framingham-based firm that sponsors LinuxWorld, yesterday awarded $25,000 to the foundation for its work in establishing Linux. On the other hand, newcomers to Linux may be losing sight of the principles of freely available software that motivated the Linux pioneers.

''It's a mixed blessing,'' Ney said with a sigh.

Material from Bloomberg News was used in this report.

This story ran on page C1 of the Boston Globe on 08/12/99.
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