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Online Extra: Before Linux Is on Every Desktop...


If you bought a soft drink or a bag of popcorn the last time you went to the movies, chances are the cashier rang up your purchase on a device running the Linux operating system -- the basic software that controls a computer. Last September, Regal Cinemas, which owns 520 theaters in 36 states, replaced its old electronic cash registers with inexpensive computers based on Linux to link its concession stands to its back-end accounting systems. Papa John's has just done the same at its 2,900 pizzerias nationwide to get more mileage out of its old hardware, since Linux demands far less processing power than rival Microsoft (MSFT) Windows. Not only that, but Linux is so-called open-source software that's usually free and -- just as important -- much more customizable than Windows.

It's in jobs such these that Linux is gaining its strongest foothold in the Windows world. Many companies would be reluctant to part with popular tools such as Microsoft Word and Excel. But specialized tasks, such as booking hotel reservations or scheduling doctor's appointments, aren't as dependent on Windows. So the less-constricting Linux operating system has found a niche in intelligent cash registers, touch-screen systems, and portable gear for connecting to the Web.

"It's possible that a whole new market of intelligent devices will arise side by side with desktop PCs," says Dan Kusnetzky, vice-president for system software at research firm International Data Corp. "Windows doesn't necessarily have an advantage there."

OVERTAKING APPLE. Microsoft continues to dominate the PC operating-system business -- overwhelmingly. Still, Linux is making inroads. At the end of 2001, Windows owned 94% of the desktop market. Mac OS, which runs on Apple (AAPL) computers, held 3%, and Linux had 2.5%, according to IDC. The 2002 numbers are still being calculated, but Kuznetsky figures that sometime this year Linux will surpass Mac OS as No. 2 -- thanks in large part to its use in specialized corporate jobs.

The push by Linux vendors into customized corporate applications is a marked change in strategy. Until recently, evangelists of Linux on the desktop have taken aim squarely at Microsoft's hegemony in traditional PCs. If Linux could satisfactorily run popular Microsoft applications, such as e-mail client Outlook, or an equivalent program built for Linux, the theory went, then everyone -- from S&P 500 corporations to mid-Western grannies -- would switch to free software, paying only for customer service and, if necessary, customization.

Now, it appears that the traditional PC will be the last, not the first, desktop product to fall to Linux. That seems to be the lesson from Lindows.com, a desktop Linux startup founded by former MP3.com CEO Michael Robertson. At the outfit's launch a year ago, Robertson was widely quoted to the effect that Lindows wouldn't be an operating system for the Linux community but rather for committed Windows users. His idea was to develop a working version of the Windows "application program interface" (API), a set of software routines, protocols, and tools that would let Microsoft applications run smoothly on a Linux operating system.

CAT-AND-MOUSE GAME. That's easier said than done, as Robertson and many others have discovered. For starters, Microsoft has sued Lindows for trademark infringement, based on its sound-alike name. Moreover, after a decade of trying to crack the Windows API, the open-source community has had only limited success. Reverse engineering an API is a cat-and-mouse game. Since Microsoft doesn't make the API public, coders who would uncover its secrets must try to deduce how applications interact with the operating system by sending a series of commands and monitoring the OS's response.

Even if the Linux gang cracks one part of the code, Microsoft can throw them off track at any time by making changes. This virtually ensures that Microsoft applications will always run better on Windows than on any unsanctioned operating system. "Trying to replace Windows with Linux to run Microsoft applications doesn't make sense," says Mark de Visser, vice-president for marketing at Linux distributor Red Hat (RHAT). "What does make sense is trying to replace the Microsoft applications with equally good Linux ones. Then users can retire Windows and all the costly software it runs." Adds de Visser: "That's still a way off."

So today, Lindows has a new strategy: Make it irresistibly easy for the less nerdy crowd to find and use applications that have been developed just for Linux. For $99 a year, Lindows.com customers get access to the Lindows software warehouse, where they can download and install dozens of programs with a mouse click. "It's just like MP3.com," says Robertson. "We didn't invent the MP3 format or the players or sell music. We just brought it all together and made it consumer-friendly."

HILTON'S HOPES. That will be harder to do with Linux than with MP3 music files. For now, Linux still appeals mainly to a tech-savvy audience, says Cynthia Lin, a spokeswoman for Wal-Mart.com, which has been selling Lindows PCs since October. Lin won't provide sales figures, but she confirms that the sub-$200 Lindows PC have been selling so well that they were temporarily sold out after Christmas.

So for now, corporate, not consumer, dollars are the holy grail for Linux suppliers, which typically provide customer support and application integration. After all, corporations purchase 77% of operating-system licenses sold in the U.S., according to IDC, and they're about the only buyers of "single purpose" desktops that run customized applications.

For example, Xandros, a privately held New York-based seller of Linux desktop software, has deployed its operating system at several Hilton hotels -- a move the hotelier hopes will save it millions of dollars. If Hilton likes what it sees, Linux could end up on the desktops of as many as 70,000 employees worldwide. Once CEOs realize how much they can save with Linux, "it's a natural step to deploy it more widely," says Frederick Berenstein, co-chair of Xandros' parent company, Linux Global Partners.

"A BIG WORLD." Of course, the software king won't cower while Linux storms its castle. "Microsoft is doing its best to create linkages between PCs and any and all new consumer appliances," says IDC's Kuznetsky. To that end Gates & Co. has developed variations on Windows for a variety of digital devices, including personal digital assistants and its new Tablet PC, on which it's possible to take handwritten notes (see BW Online, 11/02/02, "Gates's Pen vs. the Keyboard"). The operating system that underlies Microsoft's Xbox gaming console is designed to help consumers link together their Web-enabled PCs, MP3 players, and digital devices.

Still, Linux evangelists are as hopeful as ever. "It's a big world," says Xandros' Berenstein. "Everyone can share a piece of the pie." Just ask Regal Cinema and Papa John's. By Jane Black


Steve Ballmer, Power Forward
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