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IBM to spend $1B on Linux
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December 12, 2000: 2:37 p.m. ET
Big Blue throws its weight behind alternative operating system
By Staff Writer Richard Richtmyer
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NEW YORK (CNNfn) - IBM on Tuesday said it is building the world's largest Linux-based supercomputer for petroleum manufacturer Royal Dutch/Shell and pledged to invest nearly $1 billion in Linux efforts next year.
The announcement underscores Big Blue's commitment to Linux and marks significant progress in moving the alternative operating system into the mainstream commercial market.
Named for its creator, Linus Torvalds, Linux is an "open-source" operating system, which means that it is open to modifications by independent developers. Historically, it had a cult following, but its popularity has been growing in the computing mainstream, especially among Internet service providers that use it as the operating system for hosting Web servers.
About a year ago, IBM (IBM: Research, Estimates) said it would use Linux as a key part of its effort to focus on the high-growth areas of the Internet. Since then, the company has installed large Linux-based systems for customers including Lawson, Japan's largest convenience store, weather.com, the Web site for The Weather Channel, and Sendmail, a provider of Internet messaging services.
 Just last week, Telia, Scandinavia's largest telecommunications company, said it will run its core business functions and consumer Internet services on an IBM mainframe running Linux.
But the system IBM is building for Shell is by far the largest. It will comprise 1,024 IBM xSeries servers, packaged in 32 racks. Shell plans to use the system to run seismic and other geophysical applications as part of its exploration initiatives.
The system will run Red Hat's (RHAT: Research, Estimates) version of Linux, and plans to use it to run seismic and other geophysical applications as part of its exploration initiatives.
Linux is looked at by many as an emerging rival to proprietary operating systems such as the various versions of Microsoft's (MSFT: Research, Estimates) Windows, as well as proprietary versions of the UNIX operating system offered by companies such as Sun Microsystems (SUNW: Research, Estimates), the leading supplier of Web servers and one of IBM's chief rivals.
Other computer companies, including Hewlett-Packard (HWP: Research, Estimates) and Compaq (CPQ: Research, Estimates), also have pledged their support for Linux, while companies such as Microsoft, Sun, and EMC (EMC: Research, Estimates) have defended their own closed systems.
That could prove a costly mistake for those companies as more industry participants move to standards-based computing, noted Irving Wladawsky-Berger, IBM's vice president of technology and strategy.
 "With proprietary platforms, you are asking customers to make a very specific choice to a vendor," Wladawsky-Berger said in an interview with CNNfn.com. "The problem with that is different vendors have totally different competing platforms, and customers have been caught in problems when they stayed committed to one vendor, then something happened to that vendor and they got caught."
Citing industry figures provided by International Data Corp. showing Linux shipments grew faster than any other server operating system over the past two years. Wladawsky-Berger said it is fast becoming the platform of choice because of the flexibility it offers customers.
"Linux may very well become the most popular operating system out there in the next few years," he said.
Already, all of IBM's server products support Linux, and over the course of the next year, the company plans to spend roughly $1 billion on its Linux efforts, Wladawsky-Berger said.
That figure includes development hardware and software development, the operation of IBM's recently-opened Linux Technology Center, and various marketing initiatives across the company.
"Most of these investments are integrated with a lot of other investments within the company, but when you add up all those numbers, that comes out at about $1 billion," Wladawsky-Berger said.
IBM's shares were down $1.88 at $93.12 in afternoon trade Tuesday. Meanwhile, shares of Red Hat soared $1.12 to $8.31, a 15.7 percent gain on the day.
Other Linux-related stocks were heading higher as well. VA Linux (LNUX: Research, Estimates) was up $1.16, trading 12.3 percent higher at $10.56. Caldera System (CALD: Research, Estimates) shares rose 16 cents, or 6.9 percent, to $2.41. 
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