Case 008: Home Depot - Chilling Out

By Baselinemag  |  Posted 2001-12-10 Email Print this article Print
 
 
 
 
 
 
 

Home Depot no longer wants to be the poster child for how a major U.S. company might run important parts of its business on the Linux operating system. Why?

Home Depot is becoming an ostrich about the penguin. Just two years ago, the $46 billion home improvement giant became an outspoken proponent of Linux, a variant of Unix that the company championed as a key to overhauling the technology in its stores.

PDF DownloadNow, the company says it's too buried deploying new systems to talk about Linux. That's too bad, considering Home Depot's project is a lofty one: By 2003, the company could be running Linux on up to 90,000 in-store point-of-sale terminals and kiosks.

But silence surrounding the project certainly won't help encourage adoption of the operating system by big-business users. "Everyone looks with admiration to Home Depot but no one wants to follow them up the hill," says Ben Ream, an analyst at Boston-based consultancy AMR Research.

Sure, arguments for Home Depot's use of Linux—the operating system known by the unofficial trademark of a penguin—make sense. Linux is virtually free, so the company escapes Microsoft's draconian software licensing costs. Plus, Home Depot saves costs by being able to upgrade its 60 to 100 machines per store from an in-store processor, rather than loading it on individual terminals with hard disks. But IT managers may not learn much if Home Depot stays mum.

Home Depot aside, a lack of corporate momentum surrounding Linux—a decade after its introduction by Finland's Linus Torvalds—begs a question of why more big businesses aren't taking it really seriously.

While Net wunderkinds such as search engine specialist Google and online retail giant Amazon happily point to sophisticated Linux deployments, corporate America has been noticeably silent on the benefits of the open source operating system.

Truth is, few companies will say that Linux is ready for mission-critical applications. A lack of mature support, a limited amount of business software that runs on top of Linux and the uncertain futures of Linux software companies, such as Red Hat, VA Linux, SuSE and others, have made many corporate computing shops reluctant—if not downright skittish—about relying on what they see as an immature, techies-only piece of technology. "I can't have guys on a project deadline saying 'I might be able to find X on such-and-such a newsgroup,'" says Matthew Dunn, CIO of Intrawest, an $815 million resort operator, pointing to common ways IT departments find fixes for Linux bugs. "Who can stay up late sending e-mail to Linus Torvalds?"

Waddling In

Too harsh? Look again. Goldman Sachs, in a recent information technology spending report, found that of 100 executives polled, about 65% said they had no plans to use Linux at their company next year. While 24% said they would use Linux in addition to Unix or Windows, only 11% said they expected Linux to replace either.

Retailing, while a notoriously conservative industry dominated largely by Microsoft and IBM, is considered a hot Linux market. Yet in the industry overall, Linux is used to operate no more than 2% of the 10 million point-of-sale terminals nationwide, according to IHL Consulting Group, which follows the retail industry. That number may climb to 4% this year, depending on the economy, says IHL President Greg Buzek.

Meanwhile, there have been roughly 3,500 downloads of mainframe Linux from sites including Turbolinux, SuSE and Linux pioneer Marist College, according to David Mastrobattista, an analyst at Giga Information Group.

Of the organizations downloading, about 300 are developing or testing Linux in some way. But a mere dozen are using Linux for mission-critical applications. (See "Linux Adoption Cases," right).

"The people running Linux servers are associated with front-end computing," says Jean Bozman, a research director at analyst firm International Data Corp. (IDC). "On the back end and the database, Linux just isn't there." That said, there's plenty of potential for Linux, particularly within companies that can migrate easily from Unix to Linux, which has about a 27% server market share, compared with 41% for Microsoft's Windows 2000 operating system, according to IDC.

Amazon said it was able to slash technology costs in the third quarter by about 25%, from $71 million to $54 million, thanks to falling telecommunications costs and a switch to a Linux-based platform. That said, Amazon still relies on HP's version of Unix, HP-UX, to run its Oracle databases and inventory management systems.

In supercomputing, the penguin operating system is making inroads as well. The exploration division of Royal Dutch Shell Group worked with IBM to construct a Linux-based supercomputer that will link 1,024 servers. The supercomputer will be used to analyze data collected during underground oil searches.

There is mission-critical progress, too. German Linux vendor SuSE reports that one of its first customers is installing Oracle's 11i business software on Linux. The company, which has 800 employees, was expected to go live with the implementation by the end of November, according to Holger Dyroff, who runs SuSE's U.S.-based sales. SuSE is still waiting for its first SAP/Linux customer in the United States. SAP, the largest maker of software used by companies to track accounting, inventory, financials and HR needs, says 500 of its 15,000 customers are testing or using Linux.

Big Guns

Adding clout to the Linux story is corporate computing giant IBM, which wants to push Linux into the mainstream and make it as reliable as its own flavor of Unix, AIX. For many IBM customers, Linux can save money because hundreds of versions of the operating system can run at the same time on one mainframe.

IBM, which is investing more than $1 billion in Linux this year, views Linux as critical to beating Sun in the server market. Among other benefits, developing hardware for a critical mass of Linux customers could prove far less expensive in the long term for IBM than developing and releasing hardware for many platforms.

Red Hat, joining Turbolinux and SuSE, expects to deliver a version of Linux for IBM mainframes by year's end. In November, it announced a key deal with IBM to provide and support its open source operating system for IBM's entire server line, including mainframe, Unix and small to midsize business servers.

"Linux has a chance as long as the big commercial backers with deep pockets are willing to stick with it," says Dwight Davis, an analyst at Summit Strategies. IBM's support goes a lot further than "having 20 Red Hats out there" claiming that Linux is a legitimate operating system, he says.

Conservatism may still block that legitimacy.

Oracle CEO Larry Ellison, though always eager to take a jab at Linux foe Microsoft, said in February that he would not yet bring Oracle applications "live to any scale on Linux." And SAP rival PeopleSoft hasn't been developing for Linux because demand isn't there, says PeopleSoft product strategy director Chris Heller.

"We've had a lot of tire-kicking but no one is really saying, 'We've got to have this,'" he says. Even Torvalds, who in January released version 2.4 of his Linux kernel, which is expected to help companies handle larger files and sets of data, acknowledges slow progress for corporations that want to run enterprise resource planning (ERP) or customer relationship management (CRM) applications on Linux.

That's partly because about 2,400 applications run on Linux—compared with 10,000 for an older system such as Unix—according to IBM. It will probably take over a year to develop a critical mass of business applications.

"If this doesn't happen, Linux may [not move beyond] a server consolidation effort," Mastrobattista says.

Technical developments may also be a reason there are few examples of mission-critical systems, such as financial or manufacturing systems, running on Linux. For one, computing power on Intel-based machines lags and some customers are waiting for Intel's second-generation Itanium processor for high-end servers. Code-named McKinley, this successor to the 64-bit Itanium chip is due in 2002 and is expected to be able to lend what's needed for servers to handle high-end business applications from companies such as SAP, Oracle and Siebel.

Once less-expensive Intel-based machines can compete performance-wise with Sun, more companies may be convinced to migrate. "I personally believe that we will have more Intel machines running Linux than Sun Solaris machines in a three- to five-year timeframe," says W. Phillip Moore, an executive director with the Enterprise Application Infrastructure group at Morgan Stanley Dean Witter, which is testing applications on Red Hat Linux on 30 to 50 computers.

Not for Me

Yet not all companies that have already tried Linux are convinced it's the answer.

Intrawest, the resort operator, is using Linux on sales terminals in 50 of the company's Breeze/Max ski rental shops. But company CIO Dunn says it will probably stop at that, mainly because the company, primarily a Windows shop, wants to consolidate as much as possible. In this case, Intrawest bought machines preloaded with Linux and the company will continue to use them, Dunn says.

For big Microsoft customers, Linux is often an unwelcome intruder, argues independent technology consultant Michael Drips. "Every time I've seen Linux deployed in a large Microsoft shop it's pulled out within a month," he says. Tesco, a U.K.-based grocery-store-chain operator, decided against switching to Linux after Microsoft promised seven years of support if the company bought Windows. Tesco feared the in-house software development required to use Linux in checkout lines, says Doug Miller, director of competitive strategy for Microsoft's Windows division. Tesco wouldn't comment.

As for Home Depot, some speculate that the company stopped talking for competitive reasons. With rivals like Lowe's hot on its trail, why tell the world where the company is at with its Linux install?

"[Some customers] don't want the competition to know that Linux is saving them money and allowing them to get more product out faster," says Carolyn Sparano, vice president of global support and services at Red Hat.

Ultimately, companies are going to use Linux where it makes the most economic and strategic sense, argues Steve Solazzo, vice president at IBM for Linux marketing.

But even Solazzo admits it wouldn't be prudent for IBM to run its own CRM applications on Linux. That's because IBM already supports its 20,000 Siebel users internally on the industrial-strength IBM AIX operating system. "At this point, there's not a compelling reason to [use Linux]," he says.

And ultimately, a compelling reason will drive this operating system's success. Or lack of it.



 
 
 
 
 
 
 
 
 
 

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