Billions, Billions of Linux Bucks Served?

By John Taschek  |  Posted 2003-02-03 Print this article Print

IBM should come clean. Where is that Linux money being made?

Its next to impossible to disprove or prove anything IBM says. The company keeps its numbers way too private to make any sense to ordinary people or most financial analysts. It just feels contrived that IBM is claiming revenue of $1 billion on Linux. After all, just a little more than a year ago, IBM claimed it would invest $1 billion in Linux development. Certainly, IBM sells a lot of products and services, but claiming $1 billion of investment and then getting all that back a year later seems like a CFO dream at best and artificial at worst. If its true, then IBM has managed to generate an ROI that most companies would die for.

Besides, doesnt the billion number itself seem a little made-up? Dell used it more than five years ago to claim that it made $1 billion in revenue on the Internet. Cisco did the same thing. The Linux Journal had an article about Linus Torvalds giving away a billion tins of Penguin Caffeinated Peppermints to Finnish-American students (not true). Meanwhile, Microsoft had to cough up $1 billion of "vouchers" to California customers who paid too much for Office. And, ouch! HP pre-empted IBM by claiming Linux generated $2 billion of its revenue.

IBM should come clean. Where is that Linux money being made? Certainly not on core WebSphere components. The implementations Ive seen and heard about arent running on Linux. Most of IBMs Lotus products arent running on Linux. The Tivoli group may touch Linux here and there, but theres little chance of that group generating anything close to $1 billion on Linux.

That means the bulk of revenue must be coming from servers or services. Unfortunately, I dont see a lot of mainframe Linux systems, and it seems strange to count the revenue from IBMs servers as "Linux-related" revenue since theyre more or less operating-system-independent.

Perhaps IBM is talking about $1 billion of services revenue alone. That would make sense if you count a couple of big contract deals, such as the one IBM has with Halliburton to build Linux supercomputers for analyzing exploration and drilling sites for the petroleum industry. Its quite possible that IBM has made that billion on Linux. But its misleading for IBM to claim that figure as if it relates to general IT. I bet it doesnt.

Billions and billions of Linux bucks served. Where? Write to me at

As the director of eWEEK Labs, John manages a staff that tests and analyzes a wide range of corporate technology products. He has been instrumental in expanding eWEEK Labs' analyses into actual user environments, and has continually engineered the Labs for accurate portrayal of true enterprise infrastructures. John also writes eWEEK's 'Wide Angle' column, which challenges readers interested in enterprise products and strategies to reconsider old assumptions and think about existing IT problems in new ways. Prior to his tenure at eWEEK, which started in 1994, Taschek headed up the performance testing lab at PC/Computing magazine (now called Smart Business). Taschek got his start in IT in Washington D.C., holding various technical positions at the National Alliance of Business and the Department of Housing and Urban Development. There, he and his colleagues assisted the government office with integrating the Windows desktop operating system with HUD's legacy mainframe and mid-range servers.

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