Linux Brings In $1 Billion in Revenue for IBM

By Peter Galli  |  Posted 2003-01-22 Print this article Print

At LinuxWorld, IBM to announce that it received more than $1 billion in revenue from Linux sales, plus a slew of product and new customer announcements.

NEW YORK—IBM executives are preparing to announce at the LinuxWorld trade show here that the company received more than $1 billion in revenue from sales of Linux-based software, hardware and services in 2002. Big Blue will also formally introduce Jim Stallings, its new general manager of Linux, to the media and Linux community. Stallings, who was IBMs vice president of eServer sales (North America), replaces Steve Solazzo, who is on "special assignment" integrating Rational Software Corp. into IBM. Solazzo spearheaded Big Blues thrust into Linux and is credited with building it into a billion-dollar business.
In his keynote address on Thursday, IBM Senior Vice President Steven Mills will talk about the $1 billion in revenue from Linux-based hardware, software and services last year.
Scot Handy, IBMs director of Linux Solutions Marketing, told eWEEK in an interview Tuesday that its software revenues associated with systems running Linux more than doubled in 2002 from 2001. But he declined to give specific numbers or break down how much of the $1 billion in revenue came from the software, hardware and services components. "IBM now has 67 software products that run on Linux," Handy said. "This includes DB2, WebSphere, Lotus and Tivoli software. WebSphere, mostly WebSphere Application Server and WebSphere Commerce suite, and DB2 are leading the field in terms of sales, while demand for our WebSphere portal software is also all on the rise." Auto insurance company Mercury Insurance Group was a new customer win and is using IBM eServer xSeries Intel-based systems running Linux to power its new Java-based Web portals for both employees and independent agents, Handy said. Sales of IBMs AIX Unix software also grew over the past year, he said, largely at the expense of Sun Microsystems Inc.s Solaris operating environment. "Our Linux growth was also at the expense of Sun. A lot of this growth is new customer acquisition," Handy said. "The real flaw is that Sun was forced to adopt Linux and suddenly they had two operating systems to deal with. Our WebSphere business on Solaris is surging because Sun helped us sell the vision of Java, but they are not delivering the software stack on anything but Solaris. We now have 2 million active developers in the WebSphere developer domain," he said. IBM is also finding that many Windows customers now want some Linux, Handy said, but they do not want to throw away their Windows investment. "We have software that runs on Windows, Unix and Linux, and they like our vision, combined with Java, far more than they do the Microsoft-centric .Net vision. "Which is why Microsoft is struggling with the positioning of that whole thing," he said, referring Microsofts recent decision to drop the .Net in the official name of its upcoming Windows Server 2003.

Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at


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