Large, Medium, and Small Companies Switching to Linux


February 2002

The Microsoft Licensing Factor

A short time ago this column covered some changes in Microsoft licensing, including a) the introduction of subscriptions for software, b) the new restrictions on users, and c) the right of Microsoft (or the Software Business Association) to audit all your software, and suggested that these restrictions and the resulting higher prices would be good reasons to consider switching all or part of your operation open to Open Source software, such as BSD or Linux.

The new licensing has raised resistance in many places; this article describes reactions in U.S. Microsoft customers, and organized resistance in Europe ( In particular, the largest IT interest group in Britain, The Infrastructure Forum (TIF), claimed that its members would end up paying 94% more to Microsoft under the new plan, and lodged a complaint with the British governmentís Fair Trade Office. Note that "the average TIF member has 16,000 Windows desktops; one has 110,000." In the Netherlands, the Network Users Group, comprising "more than 4,000 IT managers at global companies," complained to the Netherlands Competition Authority.

As a result, Microsoft has backed down on many of its new plans, hoping to hang onto customers who are seriously thinking of moving to other software. -- A Typical Large Company Success Story (UNIX to Linux)

Over the past few years we have heard of a number of large firms moving over to Linux or BSD; these are typically UNIX shops (Linux has so far been more of a threat to UNIX installations than to Windows installations), and include chain stores, hotels, and other multi-site operations. The transition from UNIX to Linux has been easy for the UNIX-trained IT staff. The recent filing of a government-supervised financial report showed that multi-billion dollar company was able to reduce technology expenses from US$ 71 million to $54 million. Although an unknown part of this savings resulted from lower data/telecommunications charges caused by an oversupply in the market, the Linux savings must still be a substantial part of the $21 million saved, reducing amazonís losses for that quarter to $30 million. Linux must also have made a substantial contribution to amazonís coming to the edge of profitability in the following (most recent) quarter. In purely technological effect, note the immediate large improvement in up-time made by Linux, visible when the site is examined by Netcraft: Part of the reason for amazonís making the change was the availability of support and consulting from a large vendor, Hewlett-Packard (HP), who organized the transition from expensive Sun Solaris equipment over to much cheaper no-brand "white boxes."

Mid-Size Company -- A Newer Success Story (Windows to Linux)

What we hear about Boscovís Department Stores (, a 36-store chain with $US 1 billion in annual sales (on 1.6 million invoices) we will hear more frequently as more companies convert their operations not from UNIX, but from Windows to Linux.

In this case, a large vendor (IBM) also helped with the transition. Boscovís originally had had an IBM mainframe, but had replaced it with IBM NetFinity servers running Windows NT. These turned out to be very expensive, especially as the business grew. For every 10 or 12 servers added, Boscovís had to hire a new employee to service them. Finally, the server farm (which had grown to about 100 servers) was replaced by a single IBM zSeries 900 mainframe, which could run both the IBM VM operating system to behave as a mainframe, and also run, in virtual mode, all the Linux servers (using SuSE Linux Enterprise Server) necessary for Boscovís operations. The transition will be made easier because Boscovís has been running DB2 as its database, and this database runs on Linux as well. The expected savings will emerge as the company phases out the NT servers: in personnel (only one machine to administer), in licensing fees, and in such hidden costs as floor space and electricity. Boscovís rapidly growing e-commerce operation will also be moved to the new mainframe.

Small Business Success Story (Windows to Linux)

Conversions from Microsoft Windows to Linux are happening not only in Europe and the United States, but in Asia as well. The mainland Chinese government has instructed its offices to make sure that all their operational software is properly licensed. The government can thus show that it is cooperating with international copyright rules, while fostering its own aims of developing an independent native software industry in the form of companies like Red Flag Linux. Licensing fees formerly sent overseas can be saved, and the government can be sure that Open Source software, locally produced and distributed, is free from whatever unseen problems foreigners might include--intentionally or not--in code sent to China.

But small businesses as well as governments and larger businesses can enjoy the same benefits from Open Source described in earlier columns: reliability, low cost of hardware and software, ease of maintenance, and customizability. Up to now most of the stories have been about large companies moving back office operations from UNIX servers to Linux servers; recently we are hearing of more cases in which Windows servers are converted to Linux servers. Finally we are starting to hear of operations that are converting desktops from Windows to Linux (earlier desktop conversions, such as Burlington Coat Factory, tended to be UNIX to Linux conversions). In this case a large vendor such as HP or IBM was not involved.

Rob Valliere is a computer consultant in Thailand; his Linux experience dates back only a few months, and one of his correspondents says that Mr. Valliere did not even know about Mandrake Linux and its high reputation on the desktop. As a result, when he converted a small business from Windows NT to Linux, he chose the most famous brand of Linux: Red Hat.

Mr. Valliereís report ( differs from the news stories cited above: it is first-hand and enormously detailed in both the actual software used and its configuration, as well as in the actual costs. Essentially the conversion involved 1 server and 24 client machines, and saved the client US$ 10,000 that would otherwise have been spent on software licenses for the Windows operating system and for Microsoft Office; the total cost of the Linux conversion was only $5,160. Half of this cost was the hiring of an outside consultant (Mr. Valliere) for $2,500; the consultant will also be doing for maintenance and service (one nice thing about Linux is the fact that maintenance and service work can be done over the telephone line).

Of the total $5160, $2360 went for Microsoft Windows and Office upgrades on the four NT machines that were not converted because they were needed to run proprietary software that was not available on Linux and for which there are currently no Linux substitutes. The cost savings do not take into account the savings in not buying licenses for other (that is, not Microsoft Office) proprietary software (such as Adobe Acrobat). For those who have been following the arithmetic in this exercise, the remaining $300 of the $5160 was spent on a box of Red Hat Professional Server (which comes with limited support). Mr. Valliere did hot have to buy even one box of Red Hat for the client machines; he simply used his own! And--except for the four remaining Windows machines--the client has no licensing compliance or software audit worries.

By all means examine the full 6600-word report. It tells which free applications Mr. Valliere substituted for proprietary ones (such as StarOffice for Microsoft Office), and how they compare. His report is particularly valuable for his honesty in explaining what is difficult or wrong with current Open Source software, particularly about the difficulty of initially configuring a Linux system. These are real difficulties, but the raw installation of Windows onto a machine is also difficult; since most machines come with Windows installed and configured, users are simply unaware of the fact.

The Open Source tide is rising. Your own business may very well benefit from a look at your current and anticipated operations (see earlier columns): Open Source may save you money as well, even after paying an outside consultant.


Copyright © 2002 by Donald K. Rosenberg, Stromian Technologies (

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