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Panelists consider the 'business case' for open source
By Stacy Cowley
October 1, 2002 1:56 pm PT
NEW YORK -- Two years ago Merrill Lynch executive Robert Lefkowitz became intrigued with Linux and decided to install the open-source operating system on his PC at work. The company's higher powers took exception to that, and, invoking Merrill Lynch's policy against unauthorized software installations, confiscated the computer. It took Lefkowitz six weeks of explaining to reclaim his PC. He left Merrill Lynch soon after.
Lefkowitz joined executives from IBM and Red Hat Tuesday for a panel discussion on "The Business Case for Open Source Software," organized by Manhattan law firm Patterson, Belknap, Webb & Tyler LLP, whose practice includes work on intellectual property issues. Around two dozen attendees gathered for the discussion of how enterprises are using open-source products and the benefits and challenges those early adopters are encountering.
No technology takes off until a killer app emerges, and for open-source software, that catalyst was Apache, said Scott Handy, IBM's director of worldwide Linux solutions marketing.
The Apache open-source Web server offered users a free tool able to compete with expensive commercial alternatives, and by 1998 it had built up a double-digit market share and established itself on IBM's radar, Handy said. By 1999, IBM was treating Linux as a top-tier operating system and using open-source code as a foundation for some of its own commercial products, including its WebSphere Application Server.
IBM's embrace of the open-source community -- and its much-publicized US$1 billion commitment to Linux -- was the spark that convinced companies such as Merrill Lynch to take a more serious look at the open-source movement, Lefkowitz said. Once they did, the advantages of running software not owned by any one vendor became clear, he said.
"When you look at the Free Software Foundation's Web site, they have an explanation right on the page: 'Not free as in beer, free as in speech,' " Lefkowitz said. "We're not terribly interested -- from a business point of view -- in 'free as in speech,' but we don't think of 'free as in beer' as the best way to build a business either. We like to think of it as 'free as in market.' "
"Free, as in market" means that when modifications or repairs are needed, an open-source software customer can solicit for competitive bids, where a commercial software customer would be forced to turn only to the software's creator. That's an attractive proposition for a business, Lefkowitz noted.
Still, in the year Merrill Lynch has been working with open-source software, the savings it's seen have been on hardware costs, not software, he said. Replacing proprietary operating systems such as IBM's AIX or Sun Microsystems's Solaris with Linux have let Merrill Lynch trade pricey hardware for cheaper alternatives, but the products Linux is replacing are generally software vendors bundled in for free with the hardware, and maintenance and development costs are fairly analogous, Lefkowitz said.
Merrill Lynch is happy with the value it gets for the money it spends on hardware; where the company would like to drive down costs is on desktop software spending, Lefkowitz said. Toward that end, Merrill Lynch is beginning to evaluate desktop set-ups based on open-source software, with the eventual hope of running 20 percent of its desktop using open-source products.
"Our primary reason to do that is our sense that the desktop market is not a free, competitive market. Prices are higher than they need to be," he said. Migrating 20 percent of supported desktop PCs would create a sufficient user base to show vendors Merrill Lynch has an alternative, he said.
Merrill Lynch also plans to release as open source some of its own tools, once an under-development corporate policy becomes official. The company has decided that it will not create any new projects, but will contribute to the development of software it uses by releasing such items as documentation and benchmarking suites, Lefkowitz said.
Several in the audience said they are evaluating open-source software for use at their companies; others said they came to the panel discussion to hear about what issues are on the minds of colleagues.
Attendee Sergio Fanchiotti, a software engineer with Citibank, said he came out of curiosity about the current state of the industry. Fanchiotti has been working with open-source software for several years, and said one aspect of the movement he finds particularly intriguing is the dedicated hobbyists it attracts -- hobbyists who gain skills at home they can then use at work.
"If you see that on someone's resume, that they've installed and administrated something, it shows you that there is some extra step, some extra drive," he said. "(Open-source) offers a way to train yourself, at home, not just on the job."
Stacy Cowley is a New York-based correspondent for IDG News Service, an InfoWorld affiliate.
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