NEW YORK (CNN/Money) - Remember Linux? The free-of-charge operating system that was going to help put an end to the dominance of Microsoft's Windows.

Well, Microsoft is still sitting pretty, earning gobs of cash from its monopoly of the desktop.

But more and more companies seem to be embracing the penguin -- which for some strange reason has become the Linux mascot. According to a study conducted by research firm First Albany, 9.3 percent of 338 businesses surveyed expected to dedicate portions of their IT budgets to Linux-based systems, up from 5.4 percent in 2002.

The allure of Linux, in addition to being free, is that it is a so-called open-source system. That means that users can access and alter the code as they see fit. So if someone makes a useful change, Linux users don't have to worry, or wait, for Microsoft to make improvements.

For this reason, as techies gathered in New York this week for the industry's LinuxWorld conference, even Microsoft, the unlikeliest of attendees at a Linux trade show, had a presence.

"Microsoft has recognized that Linux is a big deal," says Pip Coburn, global technology strategist for UBS Warburg. "The company has a booth at LinuxWorld and is trying to steer those disenfranchised with Unix servers to Microsoft-based platforms and away from Linux."

The increased use of Linux should be good news for some tech companies, just not the over-hyped upstarts from the late 1990s. Instead of Red Hat, Caldera and VA Linux, which offer software and services to Linux users, the companies that stand to gain the most from Linux are IBM (IBM: Research, Estimates), Hewlett-Packard and Dell. (Or to quote David Byrne -- Same as it ever was.)

In fact, H-P CEO Carly Fiorina said earlier this week that Linux-related products accounted for about $2 billion of H-P's revenues in fiscal 2002. That's about 2.8 percent of H-P's total revenues last year. Not a huge amount to be sure, but not insignificant either.

According to the First Albany report, H-P, Dell and IBM dominate the Linux server market, with 29.5 percent, 21 percent and 18 percent market share, respectively, at the end of the third quarter. So all three should benefit if more companies adopt Linux.

But Eric Ross, an analyst with investment bank Investec, says that Dell (DELL: Research, Estimates) probably stands to gain the most since it is the most efficient of the three companies and has higher margins in its server products. He also expects Dell to eventually overtake H-P (HPQ: Research, Estimates) for the market share lead.

Ross does not own any shares of the companies he follows and Investec does not have an investment banking relationship with any of them.

Notably absent from this list of hardware companies however is Sun Microsystems (SUNW: Research, Estimates), which waited a lot longer than its competitors before launching a Linux product. As such, Sun's Linux market share stood at just 0.2 percent at the end of the third quarter.

"The biggest threat from Linux is to Sun," says Michael Mahoney, a managing director for EGM Capital, a hedge fund that invests in tech, telecom and media stocks. That's because Sun has been a staunch defender of the high-end Unix operating system and not nearly as flexible as the other hardware companies.

In addition, Sun faces stiff competition from these other hardware makers because they also make servers based on the "Wintel" standard, servers that run on Microsoft's operating system and Intel's chips. These types of servers are increasingly becoming a more viable option over Sun's Unix servers for smaller corporate customers, Ross says.

So even though investors might hear more about Linux over the next few years, it isn't going to take over the world. Sun is the only major tech company that is likely to be affected in a significant way. And investors will want to steer clear of the wreckage in the pure play Linux stocks.

Red Hat (RHAT: Research, Estimates), which peaked at about $143 in December 1999, now trades for about $6 a share. Mahoney says that even at this price, the stock has an "insane valuation," trading at 121 times next year's earnings estimates and 8.5 times estimated sales.

Caldera changed its name to The SCO Group (SCOX: Research, Estimates) and needed to do a reverse stock split in March of last year in order to avoid being delisted from the Nasdaq. But even with that move, the stock still trades at just $1.50.

And VA Linux, now known as VA Software (LNUX: Research, Estimates), which had a record-breaking 733 percent price jump the day it went public in 1999, trades for only $1.10. That's 99.6 percent below its first-day close of $250.