Microsoft Faces Pressure to Respond Soon to Linux System Threat
Redmond, Washington, June 19 (Bloomberg) -- Microsoft Corp.
faces increasing pressure to respond soon to the competitive
threat posed by the rapidly growing Linux operating system after
first ignoring the upstart software and then shrugging it off.
Linux's staunchest supporter, Eric Raymond, will speak to
Microsoft researchers at the company's Redmond, Washington,
headquarters on Monday. The address comes as Microsoft searches
for a manager to analyze the competitive threat from Linux and
after creation of a team to counter the competition, analysts
said. Microsoft declined to comment on its Linux efforts.
Microsoft, the world's biggest software maker, recognizes
that Linux's reliability, adaptability, low cost and loyal
support have eaten into Windows' dominant share of the server
market. As a result the software powerhouse is likely to make a
frontal assault on Linux, analysts said.
''Microsoft is going to stop treating Linux with kid
gloves,'' said Dwight Davis, an analyst at Summit Strategies.
''Microsoft is going to go out there swinging.''
Linux was developed in 1991 by Linus Torvalds, a Finnish
graduate student, who based it on the Unix operating system and
made it freely available over the Internet. The system has become
highly reliable due to constant debugging by a loyal band of
developers and is being commercialized by companies such as Red
Hat Software Inc. and supported by International Business
Machines Corp., among others.
Windows Flaws
Linux shipments will soar 25 percent from 1999 through 2003,
more than twice the 10-12 percent pace for all other workstation
and server systems, according to International Data Corp. Last
year, Linux was the fastest-growing server system, winning more
than 17 percent of all shipments, compared to 36 percent for
Windows NT, 24 percent for Novell Inc. and a little more than 17
percent for all Unix-based systems, IDC said.
''Microsoft is in an irreversible decline in servers,'' said
Raymond. ''The architecture of Windows is a fatally poor match
for the job.''
Windows NT, the industrial-strength operating system for
corporate networks, can't handle heavy, constant computing loads
without crashing because of poor design, Raymond said. A
fundamental flaw is that Microsoft keeps its computer source code
closed to outside developers, unlike Linux, which is openly
available.
Yet Raymond has no plans to meet Microsoft Chairman
Bill Gates or other executives during his visit.
''All I expect to do is address researchers,'' he said.
Job Opening
Microsoft has been struggling to come up with a response to
Linux. In October the so-called Halloween memo written by two
Microsoft engineers were posted on the Internet, saying Linux
posed a revenue threat to Microsoft.
During its landmark antitrust trial, Microsoft has described
Linux as an example of how quickly a serious competitor can
emerge.
In April Microsoft Vice President Brian Valentine said the
company was considering opening up its source code more widely
than before. Linux's open code has been acknowledged by Microsoft
as a reason for its stability.
Microsoft is advertising a job opening for a product manager
to provide a ''competitive analysis of Linux, both for providing
product planning for the development team and for technical
assistance to Microsoft's sales force.''
The software maker has created a Linux response team, led by
Jim Ewel, director of marketing for Windows 2000 server, analysts
said. Windows 2000 is the successor to Windows NT and is expected
to be released by the end of this year.
''There's no doubt that Ewel is leading the anti-Linux
effort within Microsoft,'' Davis said.
Stepped-Up Support
Pressure on the software powerhouse is building.
IBM, the world's biggest computer company, has stepped up
both hardware and software support for Linux, including the
version made by closely held Red Hat. Dell Computer Corp., the
top direct PC seller, also is installing Red Hat's Linux.
Red Hat, which plans to go public, and companies such as
TurboLinux Inc. and VA Research Linux Systems have boosted
Linux's appeal to the corporate market by standardizing it and
providing support services. In the past companies have shied away
from Linux because of too little standardization in graphics and
commands and in technical support.
Microsoft's first response must be in sales and marketing,
analysts said.
''Their job is to say, 'This is why you should buy Windows
2000,' '' said Tom Hensel, an analyst at Everen Securities Inc.,
who has a ''short-term outperform'' rating on Microsoft. They're
also looking for Linux's weaknesses, it's like war.''
Fear and Uncertainty
Microsoft also is trying to cast doubt in customers' minds
about Linux, said Dan Kusnetzky, an analyst at International Data
Corp.
''Their focus in on fear and uncertainty because there's no
single road map,'' Kusnetzkey said.
Microsoft can make the next update to Windows 2000 respond
to Linux's strengths, Hensel said.
''They need to get feedback for the guys writing the specs
for the next generation product,'' Hensel said.
Microsoft eventually may have to cut prices to compete with
Linux though so far it hasn't done so, Kusnetzky said. Linux is
cheap because its computer code is freely available on the
Internet.
Customers wanting to buy Linux are less likely to be tempted
by Windows because they want high quality, not low cost, he said.
''They're looking for the best platform, they're not looking
for packaged solutions'' Kusnetzky said.
Analysts are mixed on whether Microsoft will adapt its
software to run on Linux. If the market demands it, Microsoft
will, Hensel said.
''They're not doing what pragmatic business practices would
suggest,'' Kusnetzky said. ''They want everybody to have all
Microsoft software on their desktop.''
Shares of Microsoft rose 2 1/8 to 85 on Friday.
Jun/19/1999 14:20
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