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Free Software's Star to Rise During US Recession?
robvasquez: "Surfing the web today, I see that RedHat has broke even and that Corel has shown a surprising profit (they are they still considered a linux company, right?), so I'm seeing Linux companies out of the red! Perhaps this 'recession', whether we are starting one or even going in to one, is what we need to popularize free software. Think about it: with companies laying people off and cheapening up, whats better than free software? They could lay off 5,000 people, OR quit shelling out that much in MS licenses and pay salaries!" It's a nice thought, and a good idea for established companies to look into, but quite a few Linux companies have been hit just as hard during the recent economic crunch. I guess only time will tell if the use of Free Software is as much an economic advantage as people have been making it out to be, and now is as good of a time to test this claim as any.
Sure, you can save your company $50,000 by using linux of NT, but that is licensing costs. If you have to hire anouther admin because it is more work for your administrators to get their job done, then you haven't saved money.
The cost to hire a compitent administrator are about the same for Linux, NT, other Unix, or anything else. The cost to train someone to do that job is about the same. It doesn't matter if you are using macs, windows, multics, Os/2, linux, solaris, or Os/390, the hard part of administrating the machine isn't learning the job it is knowing how to do it right.
Linux doesn't save any money to a IT shop due to licensing fees becuase windows licesne fees are not that much. However linux can save a lot of money if the machines are set and forget. administrators are the expensive part.
Money is not the most important thing to a bank, it is the ability to get customers their money all the time and accuratly refelect it on their statements. A bank wants to save on comptuer costs only if they are sure the ATMs are working. A phone company cares more about calls getting though then about the cost of comtpuers. I've seen several places with 2 Sun E10ks sitting right next to each other, one a hot standby incase something bad happens to the other. They have a 3rd E10 in a different city they can bring online quickly. They still wouldn't let me re-boot the master e10 despite having backups avaiable just in case. The data was far more important then considerations like computer costs. they told me that 1 minute of lost data is more then the cost of those machines.
Linux isn't a factor because it is free (beer). It might be because it is free (speech). I have seen places with custom linux kernels when they needed it, but that is rare because that same shop had to manually merge in every security patch.
What company are you working for, then? The last two companies I worked for both spent well over a couple of million dollars a year in OS and Application licenses for the desktop. That doesn't include things like Oracle, Notes, or whatever that ran on the servers and weren't directly visible to the user.
If I could save my company 2 million dollars a year, you better bet I'd be getting a raise and a promotion...
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If people reacted to automobiles the way that people react to computers they would need to be taught how to drive again when switching from a Ford to a Chevy. I can just imagine it.
I'm sure that all of you who have done tech support will identify with this. It's not that people wouldn't learn if they tried, they just won't try unless they have their hand held every step of the way._____________
I don't want free as in beer. I just want free beer.
For a large company the actual cost of purchasing the software may not be the most expensive part of switching. Things like retraining, time spent rolling out the software, technicial support, document convesion can add up to alot of money.
Most IT people do not know very much about writing a business case. Most management types don't know technical speak. As a result the tech who thinks it is obviously cheaper and better to use free software has a hard time convincing management.
One of the good things that Microsoft provides is business cases. If you want to move to a MS product, all the informaiton that you need is made available. (if it actually works as stated is another argument) On their website you can often find migration guides and business cases.
This is an area where free software is greatly lacking. We need to build business cases to prove our case.
I am currently taking a course that trys to bridge the gap between the tech speak and the manager speak. For my term paper for Emerging Technologies I am going to be building a business case for the adoption of OpenOffice in the enterprise. (www.openoffice.org) I will gladly donate the business case to Sun to use to help promote OpenOffice.
I would encourage anyone who has to do a term paper like this to pick a free/open source solution to try to support.
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With MS Turning Screws on Customers the way they are, I would imagine that many mid size company's would turn to free software, instead of being faced with up to $10,000 per unlicensed product.
At one time the corporate PC LAN was ruled by Novell NetWare. At it's peak in the early 90s, it had about 80% of the "LAN Server" marketshare. It wasn't the most stable or capable product, but it provided a very managable system for file and print needs, and was often expanded for departmental e-mail service or database needs. Often these Novell systems where installed under the nose of the main/mini-centric IT department in a guerilla manner by departments.
It was also pretty expensive by modern standards, costing something like $1000/seat/year.
Meanwhile Microsoft had been slogging along with about a 10% marketshare for a OS/2-based product called LANManager. Even though LANMan had some nice features like TCP/IP support, Microsoft literally couldn't even give away (and they tried).
Then, the early 90's recession hit, affecting certain corporate headquarters-heavy areas like California and the East Coast especially bad. For those of you who are relatively new to the job market, here's what during a recession: The corporation cuts costs to please Wall Street. An prime example of a "cost" here is the IT department and IT projects.
So, as new generation of IT managers took hold, what they found was a mess: dozens of different mail systems and departmentally managed networks. Different warring tech support groups backing different technology. Hundreds of little Novell servers out in closets managed by relative amateurs.
A few things happend as a result: 1) PC and PC network management was taken from the departments and centralized under the main IT department, 2) IT support was outsourced (it was virtually impossible to get a perm sysadmin job back then) and 3) Aggressive measures were taken to reduce licence costs.
Meanwhile, the Microsoft salesman was standing at the door with their relatively new Windows NT product that carried a very attractive price. If you were large enough, they would negotiate a licence costs that was less than 1/3 of what Novell wanted. No matter that the file and print was less managable and less scalable, you could also use it as an application server to centralize (say) e-mail and/or move it off of those expensive mini's and unix systems.
The result was devestating to Novell's business. Even though Microsoft's prices gradually went up, and Novell's went down, Novell was left with something like a 20% marketshare when it was all over.
So, now we have a situation where Microsoft's prices are going up even higher and IT spending is due again for another round of cutbacks and centralization. Well, those licence costs might have seemed relatively inconsequential when the budget was expanding and you had things like Y2K and webification to worry about. But in a static or declining budget, they will stand out. And CIO's who are paid bonuses to cut costs will notice. If the RedHat salesman comes calling with numbers in hand, they will listen.
It's great to hear that some of the Linux-related companies are not suffering from that dot-com disease that says, "profits don't matter -- only market share and total sales." It's like the Japanese semiconductor companies in the 1980's ("we may lose a nickel on each chip, but we'll make it up in volume"). Unfortunately, as these companies crash and burn, they're hurting other businesses in the market, too. Take servers and routers. If you're looking to expand your business right now, are you going to buy new equipment from VA Linux and Cisco when you can get close-to-new stuff from bankruptcy auctions at dot-coms for pennies on the dollar? Nope. It's going to take a while for the ripples to die out from all of the dead companies run by people who didn't understand the basic tenets of profit and loss.