The New Linux World Order

As Microsoft (Nasdaq: MSFT) muddles forward in its Pyrrhic struggle against the U.S. government, Linux continues to encroach upon the company’s sacred Windows NT market space. Given Microsoft’s well-documented aggressive business style, many analysts are bracing for another colossal battle as the software titan hunkers down to undercut the open source movement.

Some observers believe that the company will open up its Windows CE source code, and others are convinced it will distribute its own Linux flavor. However, a more measured look at the current landscape indicates that nothing so dramatic will unfold in the near future.

Hitting the Softway

Building upon its September 1999 acquisition of UNIX firm Softway Systems, Microsoft is fusing its Interix product line with the upcoming release of Windows Services for UNIX (SFU), according to several published reports.

While SFU is designed to address Windows 2000 and UNIX interoperability issues, Interix is a bridge from Windows to UNIX and UNIX variant environments. It seems that the intent underlying the product integration is to persuade users that they can cut their losses by migrating operations to Windows.

Linux is one of several UNIX variants created from the UNIX base by Linus Torvalds — others are HP-UX, Monterey and Solaris. Although it seems clear that the Microsoft tactic is aimed at Linux, the software giant does have a rarely discussed UNIX background.

A Buried Family Secret?

In its early days, Microsoft entered into a development-driven partnership with SCO (Nasdaq: SCOC). As recently reported by, the two firms collaborated on Xenix2, a UNIX flavor specifically designed for Intel’s 8086 chip. Microsoft eventually stepped away from the deal, and Monterey fell heir to Xenix2.

Maintaining the UNIX Connection

When Microsoft announced its plan to integrate Windows 2000 with Interix in February, it looked like an obvious competitive move to boost its latest business OS offering. Microsoft needed something to distract consumers in an environment soured by bad press from the antitrust case. Windows 2000 received a lukewarm reception, though, and some experts are advising companies to postpone adoption until Microsoft has ironed out the software’s well-publicized problems.

With the release of SFU 2.0, announced this month, it is clear that Microsoft has not left UNIX behind, and is quietly suppressing any inner urges to burn that particular bridge.

Microsoft has made other public moves in the direction of UNIX and its cousins, including an announcement in January that it will make a Linux version of the Windows Media Player available.

The Penguin Gets Stronger

While Microsoft’s future remains somewhat unclear, Linux numbers continue to grow. However, analysts are not yet clear about what the financial reports mean, as some of the usual suspects have not come out on top.

According to the latest release of IDC’s Worldwide Quarterly Server Tracker, Linux server shipments increased by 166 percent from the fourth quarter of 1998 to 1999. According to the Framingham, Massachusetts-based IT research firm, Linux was the fastest growing operating environment in the server market.

Compaq beat out Linux hardware vendors in Linux-related sales, however, grabbing the top spot with $84 million (US$) in factory revenue. IBM (NYSE: IBM) came in second with $33 million and Dell Computer Corp. (Nasdaq: DELL) was third with $24 million in sales. Hewlett-Packard (NYSE: HWP) and Fujitsu Siemens rounded out the top five with $23 million and $13 million respectively.

VA Linux Systems (Nasdaq: LNUX) and Penguin Computing still managed to capture a combined total of 47.1 percent of the market for Linux servers.

Red Hat & Co. Waddle Down New Paths

In the meantime, the Linux software vendors have responded to growing market pressure by moving in new directions. Red Hat, Inc. (Nasdaq: RHAT), for instance, has released new versions of its Linux OS designed to power enterprise-level business operations that are tailored to work with Oracle8i and other high-end e-business products.

Caldera Systems, Inc. (Nasdaq: CALD) moved to become something of an e-commerce enabler in January of this year with the launch of its OpenLinux-based eServer 2.3 at LinuxWorld Expo in New York City. Meanwhile, TurboLinux has moved into the area of high performance Linux, focusing on Linux clustering.


The return of Linux stocks to the earth’s atmosphere means that the issue of Linux’s future may well be decided in old-fashioned Darwinian terms. Speaking at the Spring 2000 COMDEX Linux Business Expo in Chicago, Caldera Systems CEO Ransom Love called for the Linux community to drop revolutionary rhetoric and focus on evolving the open-source OS.

Although Microsoft’s role in this process remains vague, the world has probably not seen the last of its moves on Linux. For now, analysts and consumers will have to wait to see if the software titan leaves a discreet bridge open or crosses that bridge itself in a more overt act of war.

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