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IBM Introduces Linux Virtual Services for
Business
By Charles King
IBM has announced Linux Virtual Services, a new
e-business on demand offering that provides enterprises access to hosted
Linux-based business applications, server processing, data storage, and
network capacity via the Internet. According to the company, Virtual Linux
Services allow customers to buy only as much power and capacity as they need
in pre-determined “service units” and provide them secure access to computing
infrastructure without the expenses of buying, deploying, and managing
physical hardware. Rather than the physical Web, application, and database
servers typically used by conventional hosting centers IBM’s service will be
powered by Linux “virtual servers” running on IBM zSeries mainframes. By
partitioning processing, storage, and network capacity for individual
clients, IBM says it can isolate and map resources to client demand that
deliver the same level of separation between customers that physical servers
do. By using Linux Virtual Services, enterprise customers can consolidate
workloads from distributed servers, and smaller businesses can access
mainframe processing capabilities without making additional infrastructure
investments. IBM is offering customers a choice between “ready to go” server
platforms including an Apache-based Linux Web server, DB2 database software,
and WebSphere, and also provides an option to deploy Linux environments for
custom applications. The company also offers Linux porting services to
customers currently running custom applications on non-Linux platforms. Linux
Virtual Services includes 10% additional processing capacity per virtual
server (beyond what is contracted), allowing customers to subscribe based on
their normal capacity requirements but still handle unscheduled workload surges.
Additional capacity can also be purchased for scheduled workload peaks such
as batch processing. IBM’s Linux Virtual Services are currently available
with pricing negotiated according to contract.
Since continuing tough times have contributed to the
collapse of a number of well-known hosting services, some might question the
wisdom of IBM’s new Linux Virtual Services. We agree that the initiative
carries some risks, but we also believe that it offers the company a pair of
important strategic opportunities. First, the new services should provide a
figurative soapbox IBM can use to declaim (and demonstrate) the effectiveness
of its mainframe-based virtual Linux servers, which have been decried as mere
smoke and mirrors by some competitors since being introduced by IBM late in
2000. While IBM has made some notable wins among major telecom, financial
services, and retail clients who have deployed virtual Linux servers on
zSeries mainframes, every new business solution has its doubters. From this
standpoint, the new initiative will offer locations where the company can
demonstrate the literal efficacy of these solutions, as well as provide a
service that those interested (or even doubters) can use to dip a toe in the
water. IBM wins in either case, whether satisfying its customers or answering
its critics. The new initiative also gives IBM a chance to put its money (and
technology) where its mouth is on the utility computing initiative the
company began promoting earlier this year. While utility computing (where
services are delivered on and billed according to customer demand) are a hot
topic around the industry, building the necessary support infrastructure and
making it work requires considerable investment and expertise (making the
concept a tough sell in a slow economy). Given that IBM possesses said
infrastructure and expertise in-house, the company’s Linux Virtual Services
hosting centers could serve as both living laboratories for utility computing
development and marketing centers for potential customers.
That said, are IBM’s new Linux services a sure sell?
Not by any means. Large enterprises including LL Bean, Sonera,
Deutsche Bank and Banco Mercantile may have
successfully deployed virtual Linux servers in zSeries environments, but
leading an idea into the broader market is always harder than providing it to
early adopters. Additionally, while consolidating the workloads of dozens or
hundreds of physical servers onto a single mainframe makes sense technically
and logistically, it runs contrary to traditional IT practices, and despite
the air of techno-geek insouciance many IT staffers cultivate, most are
deeply conventional when it comes to their work and working environments. In
other words, while we expect IBM’s claims of reducing infrastructure, management,
and employee expenses will resonate among enterprise managers, many IT staff
members will embrace it as happily as they would a rabid dog. Finally, the
difficulties many previous hosted service providers (read ASPs) have
encountered could also color IBM’s chances here. To that end, competitors who
lack equivalent solutions will, reasonably enough, take advantage of every
available opportunity to cast aspersions on Linux Virtual Services, and
promote the multitudinous benefits of their own tried and true solutions. The
overarching lesson here is that while it is hard enough to create demand for
an utterly new product, selling a service that in any way resembles a less
than completely successful endeavor offers one’s competitors ammunition for
the taking and one’s customers food for doubt. The way to succeed in
circumstances such as these is to be patient, take the long view, and
publicly celebrate your victories. That strategy has worked for IBM in the
past, and we believe is likely to continue to do so in the future.
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Changing Times, Changing Strategies?
By Jim Balderston
The EU announced this week that it would be keeping
a close eye on Microsoft’s recently unveiled Palladium technology, which the company
says is designed to improve security for PCs and content and applications
stored and run on therein. The Palladium technology consists of both software
and hardware, with specialized computer chips providing encryption for PC
data. One of the potential uses of such technology would be to limit both
software and content piracy. The EU’s incoming Director General of
Competition Phillip Lowe said that the EU wanted to ensure that any new
technology introduced by the IT industry had certain levels of interoperability,
and expressed concerns that Palladium-encrypted files might not be accessible
to people using other operating systems. Meanwhile, similar issues were
raised by a report published this week from Cambridge University, which
discussed a number of potential implications of the Palladium proposal,
noting that Palladium-equipped applications could be a lock-out of
competitors, and stating that Palladium was more an effort to protect
incumbent technology firms than consumers. Microsoft officials were quoted as
saying the company may well require licensing fees for the use of
Palladium-related technologies. The EU is still in the process of pursuing
its own anti-trust case against Microsoft, and has taken a harder line with
Microsoft than have U.S. regulators.
Microsoft is among many companies that have
benefited from the boom cycle of the past twenty years. Unlike many of the
companies now so prominently featured in the news, Microsoft is not anywhere
near going bust. However, the ever-widening scope of corporate misfeasance
and outright fraud is clearly having an impact on both the investing and
voting public. When one considers the close ties of the White House to Enron,
and its ongoing pro-business, anti-regulation stances, it is not hard to assume
that a backlash — or at least a pendulum swing in the opposite direction — is
in the works. Microsoft has always been a very aggressive company; it has run
afoul of regulators on a number of occasions and yet despite these run-ins
has always returned to its traditional modus operandi. Palladium is
potentially a very powerful technology, allowing for the identification of
users vis-à-vis individual content files and applications. While some — most
notably in the entertainment industry — would welcome such developments, the
issue of vendor lockout (as an
anti-trust issue) most likely will become a more prevalent in regulators’
minds as the political tide turns back to controlling the excesses of
corporate misdeeds. In short, Microsoft may be facing a very different
regulatory environment in the coming years, one that is going to be much less
tolerant of its “embrace and extend” attitude toward standards and the
marketplace at large. Palladium offers potential benefits to both consumers
and Microsoft. Where one interest ends and the other begins will likely be
resolved in a much different, and less compromising, environment than
Microsoft has enjoyed in the past two decades.
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Listen.com Gives a Swimming Lesson
By Jim Balderston
Listen.com, a San Francisco-based company that
offers digital music subscription services, has signed a non-exclusive deal
with Universal Music Group, a division of Vivendi Universal, to distribute
some UMG titles for a fixed monthly subscription fee of $10. Listen.com’s
Rhapsody music service will include music from the recording industry’s top
five labels, which include a vast majority of all songs published; in effect,
giving Listen.com a leg up on even the industry’s own music sites. According
to news reports, the deal between the two companies took sixteen months to
negotiate. Under the terms of the agreement, users will not be able to burn
digital music onto CDs, but only to play it via the Rhapsody software. The
Listen.com offering will feature approximately 175,000 tracks total. The
company said it hopes to expand its offerings by extending its agreements
with the recording companies to allow for music to be stored and burned onto
CDs.
Slowly, how slowly the entertainment industry is
moving into the new digital age. We suspect that the prolonged negotiations
between Listen.com and UMG consisted of a great deal of handholding on the
part of the people at Listen.com, who spent that time making all the
comforting cooing noises to UMG that a parent makes to a reluctant toddler poised
at the edge of the pool. “You can do it, I’m right here, I won’t let anything
bad happen to you,” was probably the sum and substance of Listen.com’s sales
pitch.
This agreement gives Listen.com the platform to
leverage the momentum of more and more people under 18 who are downloading
and swapping music files, while UMG can claim it is now boldly embracing the
Internet. As a result, perhaps UMG will begin to understand the universal
power of word of mouth as a marketing and promotions tool and how digital
music swapping networks are a pure embodiment of word of mouth. Word of mouth
carries authority and power that $20 million promotion budgets increasingly
waste on ever more jaded and sophisticated consumers. In contrast, word of
mouth never gets stale. We suspect realization of this opportunity may take
eighteen months or more. Meanwhile, other significant hurdles remain, and the
industry knows it as evidenced by UMG’s licensing of only a fraction of its
track library. How will the music industry price digital content in a world
market? Content priced to maximize revenue in the Untied States will not sell
in parts of the world where incomes are a fraction of the U.S. average.
Pirating content will still be irresistible in such situations. How UMG and
the other media giants address this question will be the real telling point:
a conundrum that, when solved, shows that the media giants have jumped into
the deep end of the pool without their water wings.
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 Sun Hosts Bavarian Open Source Love Fest
By Joyce Tompsett Becknell
Last week, Sun Microsystems held a press conference
in Munich, Germany. In
attendance along with Sun were Apple Computer, the Bavarian Chamber of
Commerce (Industrie- und Handelskammer fuer Muenchen und Oberbayern — IHK)
and the Munich representative of the Social Democrats (SPD), the party
currently in control of the Munich city government. The title of the press
conference was “Linux, Solaris & Co.: Open platforms create freedom
alternative to monoculture.” The conference was played out as a roundtable,
hosted by freelance journalist and author Tim Cole, who specializes in the
Internet and online topics. The main thrust of this conversation was to
explore the ongoing commitment of German government and business
organizations to choosing open source solutions over a monoculture (which in
this context was spelled Microsoft) and for the technology vendors to
demonstrate their overwhelming support and admiration of the open source
movement.
Munich in the summertime usually means tranquil
afternoons spent in shady beer gardens and leaving work early on Fridays to
get a head start on the steady stream of traffic heading to Italy and Greece
for the weekend. Summertime is relatively quiet on the continent because at
any given time so many people are on holiday. Invitations to the event were
sent to both business and trade press, and they dutifully showed up despite
the bad coffee and the tempting weather outside. The first thing we noticed
was that although we were handed the standard press kit when we arrived,
there were no press releases or announcements happening that day. The Chamber
of Commerce and government representatives were happy to extol the virtues of
open source for their environment and to explain why the move made sense to them.
Both Sun and Apple were happy to stand up and give the usual vendor
statements of undying commitment and support to the needs of their customers.
But why this event? Why today? Why here in Munich? Surely the IHK or the SPD
had signed some sort of order for significant volumes of product? Yet there
were no ISVs or integrators present and there was not one application vendor
to be seen anywhere, not even lurking about the food table.
This event seems to be part of the ongoing
excitement here in Germany regarding the open source movement. Last month the
Ministry of the Interior and IBM got together to talk about how they were
fully behind the open source movement and now we have Sun and Apple along
with representatives from one of the two wealthiest states in Germany and its
capital city announcing much the same thing. And yet we can’t help but notice
that underneath the noise, not much has transpired. We have seen no signs of
any products or solutions or euros changing hands in exchange for new
hardware and software or even contracts for the same. Of course some of this
sentiment is truly heartfelt as the open source movement is much admired
here. But some of this seems to be more about a negative customer reaction to
strategic Microsoft licensing policy rather than a wholesale switch to a new
platform. And when it came time for questions and answers from the press, the
local press was more interested in asking Sun whether Java truly was an open
platform, and they challenged Apple on how they would respond if Microsoft
decided to stop developing its products for the Macintosh operating
environment. Not one question centered on the solutions being developed, the
customer problems being solved, or the expected sum of money to be spent on
open source solutions in the next fiscal year. We were somewhat underwhelmed
by the whole experience and as we continued to listen, we found ourselves
searching for the reason we had been brought to this event…
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