In particular, you might be looking to alternative operating systems, such as Linux, as a lower-cost option for some servers or perhaps even desktops. While Linux's acquisition cost may remain low, using it can be penny-wise and pound-foolish. Many in IT feel that Linux is the heir to Microsoft's 32-bit Windows offerings and will soon surpass Windows in volume shipments, but I'm not as sanguine about Linux's prospects for mainstream business, except in specific cases.
For most enterprises, the lower acquisition cost isn't a compelling reason to switch and for good reason. Windows has achieved a level of nonsubstitutable infrastructure and is tightly linked with the hardware and peripherals vendors, as well as independent software vendors. Nonsubstitutable infrastructure technologies, by definition, support high switching costs (rendering any lower acquisition cost moot). Their total or near-total permeation throughout a business makes the switch difficult to achieve. They boast strong third-party and vendor support, which Linux hasn't achieved, and functionality as a key and underlying integrated technology for other services and mission-critical business applications.
To displace Windows, Linux would have to overcome those issues and offer a compelling feature or "killer application" so overwhelming that it alone justifies a migration (in much the same way many people order HBO to watch only The Sopranos). The problem is that any application that can be created under Linux is likely to be easily ported to Windows, obviating any advantage.
While some believe that Linux will become a major success and supplant 32-bit Windows as the dominant enterprise operating system, I remain skeptical. Beyond the cost of acquisition, Linux doesn't offer a compelling force against 32-bit Windows. It remains a complex Unix variant that offers little advantage to mainstream users. The lack of standards and common APIs means that commercial developers must pick and choose a particular Linux distribution to create applications as a target platform, or face the burden for multiple Linux platforms that must be supported equally at great expense.
Despite the lack of appeal that Linux will have for mainstream enterprise users, other users will still flock to it as an alternative to 32-bit Windows. The Linux community has demonstrated long-term loyalty that will continue to grow. While standards for such things as the user interface will remain poorly defined, homegrown applications at no cost or little cost will provide the "good enough" level of functionality to keep it alive, particularly for use as a low-end server platform for e-mail and Web hosting.
In this particular market, where the technology can be substituted with little pain, Linux will find acceptance and carve out a strong niche. But the higher and broad-based markets (such as data centers and desktops) will remain beyond Linux's grasp.
Even with the diminished values of many of the Linux companies and the retreat of other firms (such as Corel Corp.) from the market, Linux remains a "hype du jour" that's still thought by some to have the potential to upset Microsoft Corp.'s dominance of the mainstream markets. But despite the hype, Microsoft's operating system dominance will likely continue, and the forthcoming release of Windows XP will only strengthen that position. Enterprise customers are wise to heed the words of Damon Runyon when it comes to mission-critical operating systems: "The race is not always to the swift nor the battle to the strong . . . but that's the way to bet."
Michael Gartenberg, former vice president and research area director at Gartner Group Inc., is a partner at Hudson Ventures, a venture capital firm in New York. Contact him at email@example.com.