Investment bank backs high-end Linux

Linux will be successful not only in lower-end servers but also in higher-powered machines at the heart of corporate computing, a new study concludes.

Linux has caught on in lesser computers that handle tasks such as dishing up web pages or storing files. But a new study this month from investment bank Goldman Sachs said Linux, benefiting from a foundation of less-expensive Intel hardware, is headed toward the Unix realm where customers are demanding, computing tasks are intense and prices are high.

"We are confident that the technical developments and market forces are in place for it also to become the dominant operating system on the higher-end servers of the enterprise data centre, where mission-critical functions are run and the lion's share of information technology spending occurs," said the report, titled 'Fear the Penguin' in a reference to Tux, the Antarctic avian that serves as Linux's mascot.

The study balances out a recent report by IDC that found Windows to be less expensive than Linux for many server tasks, chiefly because Windows was less expensive to administer.

The study included a survey of 100 corporate technology departments, 19 of which use Linux today in lower-end servers, 14 of which use it to run databases, 11 of which use it on mainframes and 12 of which use it on desktop computers. Of those considering a move to Linux, the most common reasons cited were a good balance of price performance for Intel hardware, stability and security of the overall server, and the availability of higher-end software.

Goldman Sachs said one benefit of Linux is that because it's not developed by a single company, it's inherently a more open product and one more standardised so it works on more hardware. That standardisation, in turn, means it will be harder for computing companies to use Linux as a tool to 'lock in' customers to their own technology, the study said.

Linux, with its genetic ties to Unix, is likely to replace Unix servers, the study said.

"The companies we believe will be most adversely affected by Linux are the traditional enterprise systems vendors like Sun, IBM, and Hewlett-Packard, which are the main purveyors of the Unix/RISC paradigm that Linux-on-Intel displaces in the data centre," the study said.

But Linux also poses a less direct threat to Microsoft, Goldman Sachs said.

"We believe that Linux will not take away market share from Microsoft in its traditional markets. However, it is our view that it will hamper the movement of Windows into the enterprise data centre, an area Microsoft has only recently begun to target for growth," the report said.

Stephen Shankland writes for CNET News.com.