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VA Linux CEO speaks
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February 2, 2001: 4:02 p.m. ET
VA Linux CEO Larry Augustin on developments in open source software
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NEW YORK (CNNfn) - Linux and Open Source provider VA Linux Systems ran their fifth annual LinuxWorld conference Jan. 30 through Feb. 2 in New York.
VA Linux (LNUX: Research, Estimates) CEO Larry Augustin talked about the future of the Linux operating systems and the functions of the conference.
CNNfn: With LinuxWorld this week in New York, can you tell us, what is the state of the Linux movement?
Augustin: Today Linux runs 30 percent of the servers on the Internet -- more than any other operating system -- more than Microsoft Windows and Sun Solaris. Now it's making the transition from running servers in the Internet to running servers for old economy, established businesses. Linux is moving into the large-scale enterprise sector.
 We've seen at the LinuxWorld show this year a large amount of interest from institutional, "Wall Street" users. We've seen a lot of financial service companies looking at Linux and more-traditional, non-Internet companies looking, too. Linux is moving from an early adopter into more established businesses, who are looking at it as an alternative to systems like Sun MicroSystems (SUNW: Research, Estimates)' and other proprietary Unix systems like Hewlett-Packard (HWP: Research, Estimates)'s and IBM (IBM: Research, Estimates)'s.
CNNfn: What are your thoughts on the future of open source software?
Augustin: I think that open source software can save a lot of money in IT departments. Companies can spend up to 40 percent of their budget in integrating proprietary software. Open source can cut that cost significantly. Instead of spending that money trying to make closed proprietary software talk to each other, companies can spend that money making software speak to each other.
We have a good example of Linux being used in an old economy business with a customer called WD Source -- they're an auto parts wholesaler. For the same money it cost to buy a proprietary closed e-commerce system that was generic (not customized), they were able to have us build for them an open source e-commerce system customized to their business.
This gives them a big advantage over their competition because their competitor's site is very generic -- it's designed to show things, not specifically auto parts. WD Source's Internet site is designed around people who buy auto parts and to the way customers buy. They control the whole system and it's easy to make rapid changes. They can go to any number of vendors to continue to enhance, support and develop their e-commerce system. They don't have to stay with VA because it's open source and they're not locked into us as the supplier.
With e-commerce software from Microsoft (MSFT: Research, Estimates) or other proprietary vendors, they're locked in to that vendor and it's almost impossible to switch.
CNNfn: Will other competitors be moving into open source?
Augustin: IBM has shown significant investment in open source -- they said they would spend $1 billion in Linux. Companies like IBM are seeing that there is an opportunity here. There's a big potential market around open source solutions.
 Market research by Deutsche Bank in the last week or two shows that by 2004 the market for open source would reach $75 billion, which I think is a fascinating number because open source software is free. The licensing lets you copy and download the software for free over the Internet. The $75 million market is in integration services, support and systems -- all the other things that you need to make the free software and make a solution for your business.
WD Source paid us to build their e-commerce site, but the software that runs it is freely available -- they can copy it as many times as they like and give it to other people. They don't pay license fees for the software, they pay support, service, ongoing maintenance and all the customer development work to make a site specifically for their business.
The idea is, instead of paying for the software, you pay to get something customized to you and get more for your buck. In the old world, you pay for the software and get something generic.
CNNfn: Tell us about some recent announcements of new products.
Augustin: We recently announced new enterprise service offerings, including managed service, where we monitor company sites, help keep them up and running. Recently we announced our newest Rackmount server that goes into ISPs or data centers to run e-commerce sites.
-- as reported by Carmina Perez 
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