E*Trade Bets Big on Linux

NEW YORK—Was it IBM’s much-ballyhooed recent announcement of a mainframe that runs only Linux that swayed E*Trade Group Inc. to dump its Sun Microsystems Solaris servers in favor of the open-source operating system?

E*Trade Chief Technology Officer Josh Levine says no. Instead, it was Linux’s vendor-independence that led the online brokerage firm to announce Wednesday at LinuxWorld Conference & Expo that it eventually plans to replace its more than 300 customer-facing databases, application servers and Web servers with various boxes running Linux.

And it didn’t hurt that open-source software contributed significantly to the estimated $65 million E*Trade’s information technology department saved in 2001, he says.

“It’s good for us to have a commoditized operating system,” Levine told press and analysts attending an IBM press conference at the Javits Convention Center here. “Each vendor has its own certification program for (its own brand of) administrator – but it’s only a way for vendors to make more money.” By standardizing on Linux, E*Trade “now can get vendors to compete on merits,” Levine added.

Linux, a variant of Unix, is open-source, meaning that a variety of developers have contributed the code that comprises the OS—unlike closed-source systems tightly controlled by a single vendor, such as Microsoft Windows or Sun Solaris.

E*Trade plans to employ a variety of hardware to run Linux, including IBM X Series servers, Fujitsu servers, Compaq and Dell servers based on Intel processors, Compaq Alpha servers, and NCR and Teradata servers, Levine says. Over the past four months, E*Trade already replaced a number of its Sun servers with Linux, including those running middleware and Web-server software.

It’s not just hardware that E*Trade is replacing as a result of its Linux strategy, Levine says. He notes that the brokerage also is looking at running open-source application server software from Apache and the Tomcat open-source middleware, in addition to the Bea Systems Tuxedo middleware the company already runs.

“With open systems and open standards, we can get the best performance for the money,” Levine says. “Time marches on. If you don’t keep up with technology, you fall behind. And you always want to do it for lower cost.

“Who wants to ride around in a ’65 Mustang, unless it’s a hobby?” Levine continues.

Levine says that just a few years ago, he would have been reticent to bet on open-source software. “It’s a question of how much risk do you take. Four years ago, open standards was a risk (like) gambling,” he says. But now, with major vendors such as IBM backing open-source to the hilt, the risk is worth it, Levine says.

IBM Senior Vice President and Group Executive Bill Zeitler provided LinuxWorld attendees with the second keynote address of the show on Wednesday. He noted that IBM currently has 2,500 customers with whom it has some type of Linux engagement. IBM brought 550 of its customers to the LinuxWorld show to attend panels and meetings on Wednesday, according to Zeitler.

When is it time to bet on Linux?

  1. Standardized, open operating systems provide you with more choices among hardware and application vendors
  2. Backing by major vendors with longevity and deep pockets lowers the risk
  3. Money saved by going with low-cost Linux OS and applications helps cost-justify the move