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MARCH 30, 2004
SPECIAL REPORT: LINUX SPREADS ITS WINGS

The Penguin Is Popping Up All Over
Linux is fast breaking out of its original stomping ground in servers and into cell phones, cars, telecom gear, consumer electronics...


Dana Myers is known as the penguin lady at chip giant Texas Instruments (TXN ). Since 2002, Myers has overseen development work on compact versions of the open-source Linux operating system used to run chips and circuit boards in mobile phones and other electronics products. And during the past year, Myers has boosted the size of her development team by 75%, to nearly 100 people. "All over the world, customers are asking us for Linux," says Myers.


Wait a second. Doesn't Linux reside mostly on servers, the powerful computers that run data centers, publish Web pages, and drive corporate networks? Until recently, the answer was yes. However, Tux the Penguin -- Linux' mascot -- has escaped from the server closet and is now waddling across a much wider expanse of the technology landscape.

Do you use a Linksys (CSCO ) Wi-Fi router to surf the Web wirelessly? You're probably doing so using Linux. Drive a Volvo? Somewhere under the hood, Linux is running on key microprocessors that monitor the car. Watching video on a TiVO personal video recorder or smashing a home run in the 2004 World Series on a Sony (SNE ) Playstation game console? The penguin is the wizard behind all those curtains. For such uses, "Linux is emerging as the favored operating system," says Scott Smyers, vice-president of Sony's Network & Systems Architecture Div.

TINY BUT CRUCIAL.  That's only the initial flow in an avalanche of consumer electronics, telecom equipment, and networking gear that will be powered by specialized versions of Linux in the coming year. "We're extremely bullish about the future," says Jim Ready, CEO of MontaVista Software, which produces "embedded" operating systems for electronics devices. The Sunnyvale (Calif.) company sells software tools and versions of the Linux operating system that have been specially modified for customers such as TI, Volvo (F ), French telecom equipment giant Alcatel (ALA ), and Korean electronics maker Samsung.

To date, embedded operating systems -- unalterable software that runs microprocessors whose job is to perform a limited number of tasks -- have remained a small piece of the tech market pie. In 2002, the global market for this type of software was only $675 million, according to Stamford (Conn.) tech consultancy Gartner. That should grow to more than $1 billion by 2007, a number that will still pale by comparison with the broader software and hardware markets.

Even so, embedded systems are a key underpinning of the trillion-dollar global electronics market, says Gartner analyst Daya Nadamuni. And in the future, they'll take on an increasingly important role as cars become infotainment centers, cell phones become digital jukeboxes, and pacemakers transmit data wirelessly to hospitals to warn of a heart attack.

REAL BRAINS NEEDED.  Cheaper and cheaper processors also are allowing electronics companies to build more and more computing power -- and a wider range of capabilities -- into everything from exotic medical-imaging equipment to tiny global positioning system location-tracking chips. "If a product only does one thing, it's less important that there be an operating system on it. But as we see growth in multifunction devices, a real OS makes more sense," says Peter Glaskowsky, an analyst with tech research firm In-Stat/MDR, based in Scottsdale, Ariz.

The ability to exert control over the software that runs these millions of devices will become a crucial checkpoint in the global economy. And Linux -- "open-source" software that's not only cheap but available to anyone to use or modify -- is emerging as an enabling technology in this equation. For example, a maker of cell phones that incorporate an embedded Linux OS may find it easier to build cheaper and more flexible open-source billing and tracking systems. Or an open-source media server might more easily send movies to a Linux-based TV set-top box.

Because of that potential, Linux is rapidly gaining market share in embedded operating systems. "I wouldn't be surprised if it were 20% right now," says Nadamuni. That's a far cry from the middle single digits, where Nadamuni put Linux two years ago. And it reflects an increasingly bipolar world in embedded systems, where Linux and Microsoft are gobbling up market share from smaller proprietary suppliers and exerting an irresistible tug on device makers.

UNCOUNTED MILLIONS.  Sound familiar? It should. To a degree, the same dynamics are propelling Linux' swift rise in the server OS market. Linux had a 7% share of that market in the fourth quarter of 2003 according to Framingham (Mass.) tech tracker IDC. But this number may not reflect the tens of millions of free versions of Linux that system administrators have downloaded and installed themselves. And year-over-year, Linux posted a 63% increase in market share, by far the biggest increase for any server OS.

This rapid growth in part reflects Linux' rapid move into the embedded operating system market. Until recently, makers of proprietary operating systems mainly worked that sector. The largest among them, Wind River (WIND ), attained close to 50% market share but remained far from dominant, as no one company could create products to span the thousands of types of processors that run embedded software. In fact, many device companies -- in aerospace and defense in particular -- have kept their development and code in-house.

As Linux has begun to mature, however, electronics makers have started to focus on its advantages. By incorporating it, they can minimize the number of operating systems they use in products to boost efficiency -- and thus free their programmers to concentrate on work that adds value to their products.

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