Sam Palmisano remarks at LinuxWorld 2001

The following is a transcript of prepared remarks by Sam Palmisano, IBM president and chief operating officer, in delivering the keynote address at LinuxWorld 2001 in New York City, Jan. 31.

Thank you, and good morning. I am very pleased to have the opportunity to be here at LinuxWorld with so many bright, creative, and innovative people -- who are driving a tremendous amount of change in the IT industry.

I want you to know that IBM is incredibly excited about what Linux represents and what we think we can do with the community together. There's no doubt in our minds that Linux is certainly a disruptive technology that has the potential to change the game in information technology -- forever.

Now, why do I say that? And why do we think Linux is a disruptive technology? We believe that the role of Linux can only be compared to the Internet itself. It was not that long ago that all of us in the information technology industry were looking for ways to make information systems connect. But it was difficult. The major inhibitor to that connectivity was the lack of standards for networks and software. That software was in the way.

All of a sudden an Internet community got together -- a bunch of smart, creative people -- and came up with standards. Because of these standards, we now have ubiquitous networking connectivity throughout the Web, throughout the world. Linux represents the next step in this e-business evolution. Linux will do for software what the Internet did for networks. Linux is all about application connectivity. And this is why we say Linux is for real and Linux is ready for real business.

Earlier this morning, I looked over at the Penguin on the LinuxWorld banner and I saw he was wearing a blue tie. I thought, how symbolic and relevant to the point I just made: Linux is ready for real business.

Why do I say that? Because I spend much of my time talking and listening to a wide variety of customers from around the world. These customers are beyond the tire-kicking stage. Linux has clearly moved beyond the days of experimentation. It's crossing that all important chasm from that world of academia and scientific computing to a full fledged, powerful and increasingly robust operating system that plays a pivotal role in the commercial world of e-business systems. We’re moving very, very rapidly and we believe that the year 2001 will be the year that Linux grows up in the enterprise.

To set the stage and give this discussion on Linux some context, let me begin with a very brief five year walk through on the history of e-business.

If you go back in time, the Internet was all about browsing. It was all about content. It was all about the consumer. E-mail was the big application, and searching for content was a big deal. But even back then, IBM said that the Internet was more than just about browsers. It was all about ubiquitous connectivity -- and the potential to change how business is conducted, how companies are transformed like IBM, like Walmart, like Morgan Stanley -- large enterprises.

The came the period of mass excitement and frenzy and debate about new economic models that were considered valuable even without earnings and cash! This phase peaked early last year when the Net. Gen stocks tumbled -- right around the time when Jeff Bezos of was on the cover of Time Magazine as "Man of the Year". By Spring 2000 all the dot-coms had become dot-toast. It became clear that for businesses to remain sustainable long-term, investments are required.

But that's not the point. This excitement and this understanding paved the way for where we are today. Today, e-business is all about real business. It is about companies transforming themselves on the Web. It leads to statements like Jack Welch made the other day on CNBC when he said he's driving the hell out of IT spending as he wants to expand the gap on GE's competition. This is only the beginning.

In this next phase of e-business, we will continue to see massive technological shifts. There's going to be a lot more media available -- voice, video, and content. Broadband is going to continue to drive down in price and it will eventually commoditize. But I believe more than anything else, the major driver in the next generation e-business is going to be the growth in wireless and pervasive devices. I'm talking about telematics in cars, diagnostics in all sorts of devices and navigational systems.

This is well beyond getting stock quotes, or trading, or baseball results. It's this whole wireless explosion that is going to place completely different requirements on the infrastructure -- requirements on servers, storage, software. Different design requirements on applications. Clearly applications that were heavily tied to the operating systems of the past will not cut it in this world of serious e-business.

This world will require established standards. And this is where Linux comes into play. Like the Internet, Linux is a standard around which the IT world has come together and can collaborate to solve difficult problems.

When you wrote code in the past, you were tied to the system's services that were heavily embedded around the operating system. We all understood that. It was necessary for a long period of time. Being connected to the operating system made it very, very difficult to write applications the way that people really wanted. Here I'm talking about portability across various types of systems, hardware and software.

With the whole Open Source community and thousands and thousands of the best programmers in the world writing modular and elegant code -- Linux is already as near to a commonly accepted, open industry standard as you can get. IBM spends $5 billion a year on research and development. We can't match this and have an acceptable return for our shareholders. We put a billion dollars behind Linux across R&D, sales, services and support this year. That's nothing compared to what the community will be doing -- with the army of people -- in developing this system into the future.

Linux is critical to the next generation e-business related to common application development. This, in essence, means you have the ability to write applications in a way that you're no longer tied to that operating system. You don't have to go to the vendor and get permission to innovate, because you're not tied to the operating system. The control is now in your hands.

So the whole world is changing because of Linux. It's going to be standards based. It's going to be open. And with the backing of the entire community's innovation and creativity -- it is a very, very compelling proposition.

Now, some proof points as to why Linux is ready for real business.

First, it is the fastest growing operating system. Secondly, it is "the" first operating system that wasn't developed in the United States. Linux is accepted all over the world. It is a global phenomenon, and it enables multiple, multiple platforms and environments. Again, why is this key? Because that's the value proposition to a business. The value proposition is the ability to write the application and not constantly worry about the system's plumbing or the system's architecture. Linux -- because it is so open and modular -- can run on everything from wristwatches to supercomputers.

Now, to some statistics and key Linux facts.

According to IDC, Linux is he fastest growing operating system at 28 percent; Windows is at 21.4 percent. Linux will have 38 percent of the market by the year 2004 -- and will be the largest operating system in the server environment that year. And that is one of the reasons why IBM got behind Linux: these adoption rates were so impressive. They are a phenomenally powerful statement. It's growth is huge. It’s momentum is building. It’s like the Internet: it is moving that fast.

So, why did IBM embrace Linux? Well there is a story here. I had the good fortune of changing jobs. I was going from services into our server and storage business in September 2000. At that time, I went around the world and I met with many customers, business partners, Internet service providers, NetGen companies, as well as the more traditional large kinds of customers. It was clear that in all these conversations there was this universal theme ringing through -- and that was Linux.

These companies were testing, prototyping, fooling around with Linux. Linux was everywhere -- whether I was in the United States or Germany or China or Japan, everywhere I went around the world you could listen to people talk about Linux. Everyone was curious. Everyone wanted to know what was going on with Linux.

As a result, a team of us at IBM got together -- including Irving Wladawsky-Berger, John Patrick and Paul Horn and we asked our technical community to do a piece of work on Linux. We need to address our customers issues: is Linux ready for mission critical? Is it scalable? Is it technically sound? Is Linux only going to be a community niche or is it going to grow into a completely different application environment? We needed to know the answers to these questions before we invested money and put IBM's reputation behind it.

The team came back very quickly and confirmed there were no technical issues associated with making Linux happen. They also said we could have the entire IBM family of products enabled for Linux in 6 to 9 months. Phenomenal statement!

At the same time, our Boeblingen Laboratory in Germany, was quietly working on Linux. These young, smart, brilliant people -- always wanting to work on the latest and the coolest technologies -- had Linux running on the z900, the IBM mainframe! It was incredible. In weeks, not years. Weeks. Absolutely phenomenal.

The other issue that we focused on was skills. It was clear that all the young people coming out of school were being trained on Linux. This made sense.

So, IBM’s decision to embrace Linux was based on a number of key factors including customer input, our own technical validation, the excitement we felt from our own development community, and the opportunity to establish standards that would make e-business really take off.

Since we made this decision, we've enabled all of our server platforms, our storage platforms, our software, our middleware, everything around Linux. More and more it's becoming the reference platform for all of IBM development. It's not there yet, but it will be. It will be.

Service and support has a key role to play here, too. To get customers to put mission-critical work on a Linux platform, you need to give them mission-critical levels of support.

We've announced this year that we're going to invest $300 million -- over the next three years -- in Linux services. We understand that if we’re to help our customers in this next phase of e-business, we need to, as a team, as a community, offer the same levels of services and support that customers expect when they run a mission-critical set of applications.

Let’s talk a little more about the market evolution of Linux and where we see it going. Like most innovative technologies, Linux began in the academic and scientific world. True with the Internet by the way, true with most technologies in our industry.

The difference is now we are leaping across this chasm from this scientific and academic world into the commercial world. To prove this point, I'm going to share with you a customer example. Deutsche Telecom the German telecommunications company. One might conclude, conservative by nature. Deutsche Telecom came to visit our Boeblingen Lab - and started kicking the Linux tires. They started testing it and concluded they could take all of their massive e-mail systems that they do as a service provider and put them on a Linux and a large IBM z900 or a mainframe system. Deutsche Telecom jumped over the chasm and took Linux seriously.

This leads me to what I'll call the four myths of Linux. Clearly, you all know there are many myths surrounding Linux and many different points of view. I'm going to try to refute -- with facts -- why we think these myths are no longer valid.

Here’s the first: Linux can't scale.

Maybe a year ago, maybe two years ago, we would have stood back and said Linux can’t scale, that it will take a lot of work to get it to scale. Things have changed.

Let's talk about scaling it in the context of a distributed enterprise environment. I’ll give you another customer example -- Lawsons, the Japanese convenience stores. Think of 7-Eleven in the United States; this is what Lawsons is in Japan. Lawsons is going to deploy 15,000 Linux servers. What's going to be on these servers? They're going to have a kiosk into their convenience stores. You can download music and video. Do e-commerce, buy plane tickets, check reservations, that's mission critical. Right? So this large, distributed Linux system configuration clearly works for Lawsons.

Let's talk about scaling and supercomputers. The NSG’s National Center for Supercomputing Applicatins, at the University of Illinois is doing research on gravitational waves .. you know, Einstein's Theory of Relativity. Now, that's scaling.

Here’s another example: Shell Oil. If any of you are familiar with the petroleum industry, they must find oil. They get it out of the ground, right? That's their product that they take to market. Now, think of Shell and seismic and reservoir modeling. They are now running a thousand node 2.5 teraflop Linux system. Now, that certainly is scalable.

But let's listen to what our colleague at Shell had to say about why they made this decision. Could you please run the video? [VIDEO VIGNETTE]

So much for the myth that Linux can’t scale!

Let's go to myth number two: Linux is only a niche play.

Have you heard this one before? Think about this? Web servers, Internet service provider, telcos, Internet applications. If you measure the revenue opportunity of our industry at over a trillion dollars, that's about 40 percent of our industry. That's a niche? That's a niche! That's big enough for IBM to play in! Believe me, we need big sandboxes when you get to our size.

So, it's a niche. We'll accept it as such!

I'll give you another example on this point. It’s One of the most popular sites anywhere on the Internet are the weather sites. We all have this incredible intoxication with knowing about the weather.

Let’s hear from our colleagues at and see why they chose Linux. Could you please run the next video? [VIDEO VIGNETTE]

Another myth bites the dust.

Let's talk about myth number three. Linux is not ready for mission critical production environments.

Now, I'll tell a story on my colleagues. They approached me and said they would like me to go give this speech. I said look, I'm more than willing to do it, but we must dispel this myth that Linux isn't ready for mission-critical environments. So you need to bring me some customer references that everybody will recognize as probably the most pragmatic and conservative in the world.

I was referring to financial institutions. Some of our friends down the street here in Wall Street. Pretty pragmatic and conservative companies. Well, how about Morgan Stanley? They are working to take their financial systems that are on UNIX server farms today and getting them ready to put into production on a Linux scalable mainframe. So ... financial institutions buying into Linux? Pretty straightforward. I think this example addresses this concern.

Deutsche Telecom I've already talked about. Dresner Bank in Germany, by the way, is also using Linux in production environments.

Here’s one more: Telia. Telia is Scandinavia’s largest telecommunications and Internet services provider. We recently helped Telia consolidate a complex infrastructure of 70 Unix servers into one mission critical z900 running Linux. Again, this is mission critical.

So I guess we just dismissed the third myth that Linux is ready for mission critical. It is no longer a niche. And it’s scalable.

The fourth myth I have to read, because it's a quote from some people -- an individual -- who have a different point of view on Linux. And I don't want to misrepresent the quote. So I'm going to read it. "Linux is the bathtub of code. ..." It gets better. " ... He can throw source in there. It's all floating around. And it’s available to everyone. But I as a vendor can take anything I want out of that bathtub and call it Linux."

What do you think about that? Do you buy this? Come on. That's ridiculous. Right?

Now, I accept that we all have a different point of view, and that everyone's entitled to their own opinions. Now, if the opinion is seeded in the fact that you grew up in a world where only good software can be developed in a proprietary environment and controlled, then you might say Linux is a bathtub. Then I would argue that perhaps that's a product of your environment. And we all understand that. We are all products of our own environments.

However, IBM has a different point of view. We believe that, like the Internet, communities working together can produce wonderfully, exciting, quality work, giving customers completely different and new technologies that they haven't experienced in the past.

To us, it's very simple. We think people in our industry need to make a decision. They need to vote. Either you can say I'm for Open Source, open standards, or I'm against standards. Either you can say I'm for giving customers and communities a choice or I'm against giving customers and communities a choice. Yes, it’s that black and white.

At IBM, we made our decision. We had our strategic debates. And we made our choice. We voted for Open Source industry standards. We made that decision.

We are putting a significant amount of IBM's future prosperity, behind Linux. We don't invest a billion dollars casually. I know we're large and these are big numbers. But believe me, investments like these get a lot of scrutiny. Lou and I don't write those checks without some engaging meetings!

But again, let's stand back and say why did IBM embrace Linux? We did it because it goes back to our vision of the e-business world I discussed earlier. We believe that the digital economy, the next stage in the e-business evolution is going to require very complex, difficult technical requirements to support it. This gets back to the e-business infrastructure that we talked about with billions of devices accessing data from all different sources. This is a very, very complex technical task.

At IBM, even with all of our resources, we don't believe that our company could solve these problems alone. Quite honestly, we don't believe any company in our industry could solve it alone ... although clearly some have that belief.

We believe that the only way to solve these very complex and difficult problems is through open industry standards and through working with communities.

It's the only way. We're going to have to unleash the creativity of thousands of people around the world, whether they're in governments or universities or in business laboratories, that's what it's going to take to solve this problem.

To get e-business where we want it to go, to take it to its next evolution ... To a digital economy ... just like the Internet ... standards have to emerge.

You are the community that can get it done. We know we have to work together, and if we work together and we stay focused, we have a wonderful, wonderful opportunity. We can change the landscape of this industry and make e-business the true reality we all want it to be.

Thank you for having me. I'm honored to be here. Enjoy your conference.

Copyright 2001