Hunting for a Return on Linux

By Sean Gallagher Print this article Print

IBM says you can save big time. But is there real value with the penguin?

Can companies save big bucks with Linux? It's a definite maybe.

IBM is the poster penguin for large vendor support of Linux. It says you can save big bucks using the "free" operating system on its servers, compared to the Unix servers of newly ardent Linux supporter Sun and others.

A study by the Robert Frances Group, sponsored by IBM and published in August, said that a Linux server costs $475,000 less over three years to deploy and support than an equivalent Sun server installation running Solaris, Sun's version of Unix.

"When the Internet boom happened a few years ago, customers built out originally with Sun solutions," says Stuart McRae, IBM's manager of its xSeries server line. "Now they need something that's more affordable."

There's no denying that real businesses are now using Linux for some serious applications. Credit Suisse First Boston has built a trading system on Linux E*Trade. CTO Josh Levine says switching his company's trading systems to Linux on IBM mainframes contributed to $65 million in savings in 2001. And Amazon execs claim that dropping Sun servers in favor of Hewlett-Packard hardware and Linux to run its online retail operation saved them $17 million a year—25% of Amazon's technology budget.

But are those kinds of return on investment realistic for every firm? What if you're not building Internet infrastructure, or a wireless trading system, or the world's largest virtual retail environment?

Robert Frances Group analyst Chad Robinson hedges. He says the study was limited to Web server cost-of-ownership based on a sampling of corporate sites, using Apache (or in the case of Windows, Microsoft Internet Information Server) Web server software. Even with that limitation, "we ended up with a lot in the 'soft cost' area," he says. Those "soft costs" included the value companies assigned to security, availability and the ability to scale up the processing power of a server.

Once you get past the caveats in the report, there's a lot less for IBM to be bragging about. And clearly, just looking at how cheaply boxes can serve Web pages doesn't necessarily give a complete picture of their return on investment. As Robinson observes, "Any vendor who sponsors a study like this is going to try to use it for anything they can."

For a customer that could substantiate the savings, IBM directed me to QualTel, a software provider for telecommunications companies. John Pucknell, CTO of QualTel, says he got a 20% performance gain by moving from Solaris on Sun Netra servers to Linux on IBM xSeries servers.

"We've been on Solaris for six or seven years," says Pucknell. "We seriously looked at upgrading Solaris boxes, and the good news was their price was coming down. But the bad news was that for half the price, I can get an Intel box with three times the [processor] speed running Linux."

Of course, the latest crop of Netra servers is faster, too—the new 900 MHz Netra 20 runs 72% faster than the model QualTel is replacing, according to Pradeep Parmar, Sun's product marketing manager for the Netra 20.

So what's QualTel's savings as a result? "My savings is really nothing—I don't actually buy the hardware," says Pucknell. QualTel just writes software. And, since QualTel's software is still getting tested in IBM's Linux lab, none of QualTel's customers are saving money yet, either.

Neither IBM nor its Linux partner, Red Hat, produced a customer who had switched from Solaris to Linux to run packaged applications and was willing to talk about savings. HP and Oracle also came up dry—while both say that they have such customers, those customers are in the early phases of rolling out Linux and don't have solid ROI numbers.

So can you save money running your enterprise applications on Linux? Probably. But since Linux currently only scales up to an 8-processor server (even when those processors are on a virtual server inside an IBM mainframe), you probably won't want to replace your 106-processor Sun Fire 15K or HP Superdome with a Linux box just yet.

Sean Gallagher is Technology Editor at Baseline.

This article was originally published on 2002-10-11
Sean Gallagher is editor of Ziff Davis Internet's enterprise verticals group. Previously, Gallagher was technology editor for Baseline, before joining Ziff Davis, he was editorial director of Fawcette Technical Publications' enterprise developer publications group, and the Labs managing editor of CMP's InformationWeek. A former naval officer and former systems integrator, Gallagher lives and works in Baltimore, Maryland.
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