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Cost Replacing Functionality as Linux's Appeal

With a shrinking server market, financial services firms are porting more applications to Linux at the expense of Unix and other legacy platforms. While that has been an ongoing trend for many years, the motive has shifted in the past year from adding new functionality to reducing cost. That was the consensus at Monday's annual Linux on Wall Street conference in New York.

"The global financial crisis has changed business priorities," said Inna Kuznetsova, IBM's director of Linux strategy, during a keynote panel discussion. "People are less focused on adding functionality and more focused on cost reduction."

Improving cost performance is the key reason Linux is the primary operating platform for applications at Morgan Stanley, said Anthony Golia, the investment bank's executive director of enterprise computing. "It performs really, really well, on inexpensive, let's say commodity hardware -- that's what brought it into the door for us in 2001-ish and it continues to be a reason we continue to use it," Golia said.

Linux is the operating system of more than half of all applications at Morgan Stanley, Golia said, though the company runs systems on just about every major platform.

In recent years, Linux has become a proven operating environment for reducing the cost of developing applications, said IDC analyst Al Gillen, whose firm has performed benchmark studies. "The more common your architecture can be, the more common your software stack can be from platform to platform, the better you can manage cost because you have less diversity."

Another way Linux is helping reduce costs is through consolidation projects, Kuznetsova said. "If you have to consolidate two different large infrastructures, sometimes choosing Linux as an environment for consolidation allows you to keep maximum of existing hardware and consolidate skills and management of systems [with a] minimum of head count and minimum of resources," she said.

While cost is a prevailing factor these days, Golia said there are other significant reasons for his company's heavy use of Linux. One is the large ecosystem of third-party applications that has emerged. Another important reason: the ability to fix bugs and improve functionality.

"Whenever there is a bug or a new enhancement, there's a large and diverse group of minds looking at it to figure out what is the best way to fix this bug, or what is the best way to implement this particular enhancement," said Golia, who described his development group as a major contributor to bug fixes and enhancements. "We feel empowered by that," he said.

In a growing number of cases, enterprises are using non-commercial Linux for non-mission-critical applications, Gillen said. "They tend to pick it for less critical workloads, where if they have a problem and they can't figure out how to fix the kernel and they have to go out and rebuild the system and they are down for a number of hours, those less critical applications can survive that type outage," he said.

Linux and Windows remain the fastest growing operating platforms, Gillen said in an interview. Despite plummeting server hardware sales over the past several quarters, he said sales of Linux distributions and Windows licenses have held up.

"If you look at the revenues from Red Hat and Novell, they've held up surprisingly well considering how the server market is doing, and that's partly because there are annuity streams associated with subscriptions and, in Microsoft's case, they have customers on Software Assurance," he said.

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.

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