How Will Linux Affect Your Company?

You would think that Mike Mansfield would tire of explaining how Hardware Canada Computing (HCC) got its start, but he doesn't. Despite having told the story on many an occasion, HCC's president always makes it seem as though he is telling it for the first time. A sense of excitement enters Mansfield's voice as he describes how Mac Brown, CEO of HCC, opened a shop out of the trunk of his car in 1987.

"Mac was a tech support on the UNIX platform for a company in Ottawa. But, the company got into financial trouble due to rapid growth and went bankrupt. Right away, Mac gathered up the list of clients that he was already supporting at the time. In the absence of a company, he put a toolbox in his car and continued to support his current clients," recalls Mansfield. "When we say that HCC started in the back of Mac's car, that's a very true statement."

My, how things have changed. The company has sold about $160 million worth of products and services since its humble beginnings. HCC outgrew Mac's car many years ago, but the headquarters of the company is still in Ottawa. What was once a one-man technical support show has now ballooned into a company of 120 employees. Technical support still remains the cornerstone of HCC. However, the company also resells and integrates a range of products and also manufactures a line of workstations.

Mansfield is the first to admit that he considers Mac Brown to be visionary. But, as a private company, you can only afford to follow the right visions. While Brown started his career working in the UNIX environment, the latest opportunity pursued by HCC happens to be with a different operating system. That operating system is Linux (LIH-nucks).

"Linux is a new operating system that is basically a derivative of UNIX. It scales from the desktop to the enterprise," explains Mansfield. "Linux is also an open operating system in that the source code sits on the Web under a general public license (GPL). Anyone can write applications to modify Linux, but you have to send that information back onto the Web for all to benefit."

Obviously, VARs and integrators have to get up to speed on Linux as their customers start asking about it. And, according to Mansfield, many information technology (IT) departments have been experimenting with Linux for some time. UNIX remains an expensive proposition for many end users. Windows NT is less expensive, but also less scalable. (Also, the release of Windows 2000 has been continually delayed.) Linux could be a viable operating system for the future, but how will that affect your business?

Linux Eliminates Operating System License Fees
As a VAR or integrator, part of the total bill you prepare for your customers includes the licensing charges that you have to pay. In essence, VARs are the middlemen and whatever they pay as a license fee is sure to get passed on to customers. "There are licensing costs for UNIX and NT, and these costs inflate the price of what we sell. Whether we resell a product or manufacture it, the end user will ultimately pay for the license. As long as license charges exist, product prices will only drop to a certain point and then no further," states Mansfield.

Mansfield uses the example of a company that produces a router for resale. If the company puts a proprietary mother board in the router, a license fee must be included. The manufacturer sells the router to a VAR and the price includes the license fee and, of course, the usual markup. The VAR, in turn, marks up the router even further before selling it to an end user. "There are a lot of organizations that spent a lot money on computing over the last few years. In some cases, this was money they did not necessarily have to spend," says Mansfield. "We have driven PC costs below $1,000, but the prices of servers, for example, are still very high. Eliminating licensing fees could change the price structure for a lot of products."

Market Opens For Application Developers
In addition to reducing the overall price of technology, the adoption of Linux should also increase competition in the application development marketplace. It wasn't that long ago that end users chose from several word processing or spreadsheet packages. For the most part, that changed when Microsoft began to bundle Word and Excel with its operating system.

Netscape suffered the same fate as a browser interface when Microsoft began to bundle Explorer. In each of these cases, end users generally accepted the application which was bundled with the operating system. "When Microsoft is giving away applications with its operating system, it makes it difficult for other companies to compete. It stifles competition," states Mansfield. "Bundling applications also allows Microsoft to maintain the price of its operating system."

Linux levels the playing field for application developers. For instance, a company like Corel is suddenly back in the game. Corel can develop an office suite of products (which could include the company's WordPerfect and Corel Draw) for the Linux operating system. "Corel could create an office suite for Linux with a graphical user interface (GUI) similar to Windows," says Mansfield. "We could take that suite and put it on our hardware. We would have a computer with an operating system, GUI and office suite that does not use Microsoft in any way. Now we have competition, and competition drives prices down."

Mansfield's proposal is not far-fetched. His company is currently working with Corel to develop products that use the Linux operating system. Not only is HCC addressing a potentially burgeoning market, but also reducing licensing fees in the process. "Manufacturers are going to start turning out Linux workstations that will scale from the desktop to the enterprise. Corel, and other developers, can bundle their products and services and sell them to these manufacturers."

Offering Linux Support
A free operating system with more functionality than Windows NT seems to good to be true. But, according to the Linux home page (www.linux.org), there are currently 7.5 million current Linux users. And, as Mansfield mentioned, IT departments have been experimenting with the operating system since its inception. "The international space station has a docking program for refueling and that program is written on Linux. When I read that NASA was using Linux, I knew it was a legitimate operating system," comments Mansfield.

In addition to developing applications for Linux, companies are also starting to offer support. For example, a company called Red Hat will sell a copy of the Linux operating system to end users. Why would end users pay for something that they could download from the Web for free? The answer is support. End users get a CD containing the operating system, but they also get phone support through a toll-free number. As the number of Linux users continue to grow, support could be an important offering from VARs and integrators in the future.

Linux users that run into a stumbling block can also turn to the Web for support. "If I had a question regarding Linux, I would just post it on the Internet. Within a day, I would have 100 responses from all over the world," states Mansfield

"No One Ever Got Fired For Buying IBM"
Mansfield admits that there is a potential stigma attached to implementing Linux as opposed to Windows or UNIX. "It goes back to that old philosophy that no one ever got fired for buying IBM," says Mansfield. "There are people that have been running their Web servers on Linux for a year, but they aren't necessarily telling anyone about it." However, he adds that cost and performance will move Linux into the spotlight in the near future.

"It's time that we went to an open source on an operating system and I think this will happen with the new millennium. With developers constantly upgrading the functionality of Linux, it won't be long before Linux is the operating system of choice. And the licenses will disappear," concludes Mansfield.

You can't help but think that Mansfield's enthusiasm for Linux is in part tied to his company's humble beginnings. Both Linux and HCC started as long shots. Founded in the trunk of a car, HCC has grown to be one of Canada's largest resellers. And, few people could have predicted that Linux would have ever appeared on Microsoft's radar screen. Now, HCC, and the operating system it touts, seem headed for continued success.