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Welcome to the State of Linux: Population Rising

Though Linux has achieved significant adoption in the world of computing, and offers the ability to exert greater price pressure on hardware vendors, vertically aligned financial-services-technology providers have yet to port to the new platform en masse, says Dushyant Shahrawat, senior analyst with TowerGroup.

Though Linux has achieved significant adoption in the world of computing, and offers the ability to exert greater price pressure on hardware vendors, vertically aligned financial-services-technology providers have yet to port to the new platform en masse, says Dushyant Shahrawat, senior analyst with TowerGroup.

"I think a limitation is the inadequate independent-software-vendor support. Even though you have strong horizontal support from firms like IBM and Oracle, it has been a slow process of vertical vendors porting their applications over to Linux."

In a presentation being given today, Shahrawat talks about the three stages of Linux adoption: The first, he says, occurred pre-1998 when "people just heard of it and immediately brushed it off." The second stage lasted from 1998-2000 which saw about a 1 percent penetration rate in financial services. Today, says Shahrawat, Linux has about 7 or 8 percent market share in the server world. "People like Merrill Lynch and Morgan Stanley and Bear Stearns are now talking about their experience with Linux. It has turned a corner and people now understand where it does and does not fit," he says.

There are a few factors that are strongly pushing the adoption of Linux, he says. The first is largely overstated - pricing. Potential Linux users, he says, make too much of the fact that no licensing is required due to Linux being an open source technology that is not owned by any one vendor. Rather, pricing obligations come to the forefront because users must still contract out to a vendor for support of the new technology. "People focus too much on the cost and licensing issue," he says. "That is almost missing the point. Once you have your choice of hardware providers, it changes the hardware business into a commodity. In the past, if you ran Solaris, you could only buy from Sun Microsystems. Not if you're on Linux." That is where the real savings comes in.

Sun Microsystems and Microsoft, long-time fierce rivals, are both fighting the Linux onslaught, says Shahrawat, but that may not work for long. "Who do you fight?" he asks. "You are fighting a community, a movement. Who do you go after in this space?"

For institutions that haven't jumped on the Linux bandwagon Shahrawat says the first step is to understand what the firm hopes to gain from porting its servers over to a Linux platform. He says that Morgan Stanley's desire was to utilize its hardware more efficiently. "Instead of buying more high-end 32- and 64-bit servers, they wanted two- and four-way servers (two or four processors on a single machine). They wanted to increase their processing power by stringing together cheaper hardware."

Shahrawat also seeks to dismiss the idea that institutions are adopting Linux for the same philosophical and philanthropic reasons that caused programmers worldwide to donate their time and expertise to its development. "Institutions don't care about that. They only care about economics. It is simply the economics that is driving institutions like Morgan Stanley. People should realize that."

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