Linux Becomes a Serious Option for Business

Until recently, Linux was used mainly by IT pros and PC hobbyists and enthusiasts, safely cementing its geek reputation. But with consumer perceptions of existing operating systems as bloated and costly, this just might be Linux's time to shine.

Released to the public in 1991 and derived from the mainframe-era technology Unix, Linux is today the best example of "free" or open source software, which can be changed, updated and redistributed by anyone.

Freedom Is Attractive

Reuben Davis, a consultant for Affiliated Computer Services (NYSE: ACS) , a large IT services outsourcer, began experimenting with Linux about four years ago, installing it on old computers and stacking software on the machines. The main draws for Davis: no licensing restrictions and an open source code.

"There's always been sort of a geek factor to Linux," Davis admits. "While it's not usually as easy yet as just putting in a disc and [installing] your OS ... it can be practical and certainly way less expensive than Windows; in most cases, free." Linux also powers the PlayStation game system and a host of other devices.

Davis made another interesting discovery: large tech firms such as Dell (Nasdaq: DELL) are beginning to leverage the power and flexibility of Linux. And in late 2007, Everex began selling its Linux-based "gPC" at Wal-Mart (NYSE: WMT) for US$200, billing it as an alternative to more costly machines anchored by Microsoft's (Nasdaq: MSFT) and Apple's (Nasdaq: AAPL) operating systems.

Price Is Right

Dell has also rolled out Linux PCs in limited release in the U.S., and several Chinese firms are building Linux PCs poised to sell at $100. Thus, Linux could be a nifty proposition for individuals getting their first computer or small businesses using multiple workstations. Moreover, in an increasingly boxless, Web-based software realm, applications such as Sun Microsystems' (Nasdaq: JAVA) OpenOffice and Mozilla's Firefox can run on Linux. Even Google (Nasdaq: GOOG) is developing a suite of office applications for Linux PCs.

Indeed, for companies with fewer than 50 workstations that use computers mainly for the Web, word processing, and spreadsheets, getting multiple licenses for each computer using Windows can add up. Windows Vista Ultimate is listed at $399 for one PC (and $259 for an upgrade); Vista Home Premium is $239 (with a $159 upgrade). Apple's Mac OS X v10.5 Leopard is priced at $129 ($199 for the Family Pack).

Coming of Age

"When you think about the basic things that businesses do: surf the net, use e-mail , write notes, it's really a solid and viable platform," says Judy Chavis, director of business development for Dell. Chavis has worked in the open source community for 10 years and has done stints at IBM (NYSE: IBM) , Hewlett-Packard (NYSE: HPQ) , and Compaq.

She says her sons even use Linux at home. Further, she adds that the open source mentality, along with the impending virtual machine trend -- allowing users to have both Windows and other systems on their PCs -- is creating choices for consumers.

Thus far, Dell has shipped fewer than 50,000 PCs, proving that Linux is still in its nascent stages in the mass market. And there are drawbacks: For starters, there's the time spent learning an alternative OS, which may lead to additional costs in training users. "For now, it's really still a second PC in the home, but perhaps a good alternative at work" says Chavis. "The Linux PC has come of age."