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Monday, October 11, 2004 - Page updated at 12:00 AM

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Microsoft grass-roots rival Linux thriving in Portland

Seattle Times technology reporter

Linux and Portland


Over the past decade, the two have quietly formed a bond of sorts

1991: Linus Torvalds creates Linux.

1994: Portland Linux Users Group (PLUG) forms.

1998: IBM begins to back Linux.

2000: Intel, IBM, Hewlett-Packard and others start Open Source Development Labs (ODSL) in Beaverton, Ore.

2001: IBM Linux chief Dan Frye relocates to Beaverton to head its Linux Technology Center.

2003: Torvalds goes to work for OSDL.

2004: Torvalds moves to Portland.

PORTLAND — There's a new rivalry brewing between Seattle and Portland, and it makes the Sonics and Trail Blazers look like kissing cousins.

Portland has quietly become the world hub for Linux, computer software that's now the biggest threat to Microsoft.

In tech circles, Seattle is known as a software town because of Microsoft. Portland is a hardware town because of its semiconductor industry, driven largely by Intel.

Yet over the past decade, a cluster of software companies involved with Linux and other "open-source" software that's distributed free of charge has appeared in Portland.

Nearly every major tech company backing Linux, including longtime Microsoft competitors, has programmers here working on the software. Their expertise has helped transform Linux — an operating system for controlling the basic functions of a PC — from a hobby into a direct competitor of Microsoft Windows.

Capping it off, Linus [pronounced LEE-nus] Torvalds, 34, the Finnish programmer who created Linux in 1991 and still oversees its development, moved to Portland in June.

"You could probably make the claim that there's more Linux leadership in Portland than in any other city in the world, and more direction is being set for Linux in Portland than anywhere else in the world," said Stuart Cohen, chief executive of the Open Source Development Labs (OSDL), a worldwide Linux coordination center based in the area.

Microsoft's point man in the fight shrugs it off.

"If they were in Portland or if they were in Redmond or if they were in Bangalore, India, I don't think it would make any difference," said Martin Taylor, who leads 10 strategists in Redmond working to fend off Linux.

Microsoft's monopoly on desktop computers is intact, but Linux is growing faster than Windows in the lucrative, crucial market for data-serving computers used in corporate and government networks.

The risk is great enough that Microsoft warned shareholders about it last month in its annual report. To the extent open-source products such as Linux gain acceptance, the report said, "sales of our products may decline."

Good match

Portland and Linux seem like a natural fit. From its out-of-the-mainstream start, Linux has a woolly, countercultural aura that fits with the city's persona. Linux groups began appearing a decade ago, and one helped the regional education district to start using the software in 1999.

The city even has a thrift shop called Free Geek that's "helping the needy get nerdy." It sells used computer parts and recycles PCs. The machines are loaded with Linux and other free software and given to charities and volunteers.

But Portland's emergence as Linuxtown really has more to do with big business than idealistic hobbyists.

In the late 1990s, Intel and other industry heavyweights watched the market demand for Linux grow and decided to get involved. They wanted to sell more products and services based on the software, and to help accelerate its development and testing.

In 2000, they formed the Open Source Development Labs to help coordinate work on the foundation of Linux.

Portland was chosen largely because three of the lab's initial backers — IBM, Hewlett-Packard and Intel — had a large presence in the area, and space was cheaper than in the Bay Area or Seattle, said Nelson Pratt, the lab's marketing director. Other founders were Hitachi, Fujitsu, NEC and Computer Associates.

Cohen, the lab's CEO, happens to be a Portland native, though he was hired after the location was decided.

The lab started operating in Portland in 2000 and last summer moved into a snazzy new building in suburban Beaverton, complete with a state-of-the-art testing lab. It has more than 50 member companies on five continents and a $10 million annual budget.

One of OSDL's first tasks was to "harden" the kernel — the computer code at the heart of the operating system — and make it more secure and reliable for corporate and government customers.

Now the group is coordinating the development of specialized versions of Linux, helping to market the software, defending it against legal challenges and testing new versions of the kernel. It also employs Torvalds, though he generally works from home.

IBM connection

Portland also is the hometown of Dan Frye, an IBM researcher who turned his company on to Linux in 1998 while he was working at its New York headquarters.

IBM is more than just another Linux player. After the biggest computer company in the world embraced the software and applied its engineering and marketing expertise, it helped legitimize Linux with big companies and governments. Now it has more than 10,000 customers using IBM commercial products based on the Linux platform.

They include the Charles Schwab brokerage, which uses a Linux system to analyze customers' financial situation and develop a suggested investment portfolio. The state of Idaho uses it in its accounting and payroll operations to publish reports on the Internet.

Frye said it all began with a casual comment he made during a brainstorming session a week or so after he joined IBM's emerging-markets team. He used to build supercomputers and knew academics who were talking about using Linux for supercomputing, so he brought it up.

"I raised my hand and said, 'What's our Linux strategy,' " he said. "Of course, the answer was, 'What's Linux?,' so I got the job of going off and writing a one-page paper of what Linux is, to bring back for our conversation."

Then Frye helped create a business plan. Competing with Microsoft wasn't a major emphasis, he said. The greater opportunity was to win new customers, particularly away from Sun Microsystems.

IBM ramped up quickly. By 2001, Frye had more than 200 employees. His Linux team was outgrowing headquarters; it needed to choose a new location, and IBM had room at its Beaverton campus.

"Because I grew up here, it just seemed a natural place," said Frye, who now has a team of 600 working on Linux. About 100 of them work in Beaverton; the rest are scattered in 45 cities in 12 countries.

"Clearly, the technology was successful without IBM," Frye said. "It was started; it was being deployed thousands of places in the world long before IBM got involved. But we certainly helped provide an aura of respectability, of dependability, of reliability."

Fertile ground

Another factor in Frye's move home was that Portland already had a concentration of Linux expertise.

Linux is basically a descendant of Unix, an industrial-strength computer operating system developed in the 1960s by Bell Labs. It was historically the software of choice among telecommunications companies and was widely used in Portland's tech industry.

For programmers and companies, making the switch from Unix to Linux is relatively easy.

Torvalds came up with Linux as a way to get the power of Unix onto his PC, much as a hot-rodder would squeeze a V-8 engine into a sports car. At the time, he was a 21-year-old student at the University of Helsinki.

Torvalds decided to share Linux with other hobbyists, so he posted it on the Internet and asked for suggestions and input. The project snowballed, and thousands of volunteer programmers around the world have worked collaboratively to improve the system. Today, passionate volunteers supporting the Linux "community" range from Scandinavian teenagers to Berkeley, Calif., graduate students to senior engineers at IBM.

Work on the kernel at the heart of the system is managed by Torvalds and Andrew Morton, a Bay Area programmer employed by Digeo, an entertainment-device company based in Kirkland and owned by Microsoft co-founder Paul Allen. Morton also works as a contractor at OSDL.

OSDL has about 35 employees. A third are engineers working on code, a third are test engineers and the rest are involved in administration and management.

Cohen estimates that altogether the Portland area has perhaps 800 people employed as Linux developers.

Government officials hope that number will grow more, now that there's a cluster of Linux development in the region. The city of Beaverton may even start a business incubator to nurture open-source startup companies.

"This is sort of the center of gravity, if you will, for a lot of the Linux and open-source community globally," said Janet Young, the city's economic-development manager.

Despite the strides made in places like Portland, Linux has been slow to catch on as a desktop operating system, in part because it's still more complicated to use than Microsoft's Windows.

But it's the fastest-growing software for the lucrative server computers used in corporate networks. Linux server sales were up 38 percent in the second quarter of this year — the eighth consecutive quarter of double-digit Linux growth — with more than $900 million in sales, according to IDC, a Framingham, Mass., research company.

So far, Linux is being used mostly in servers that do peripheral activities in corporate networks, such as running e-mail systems, hosting Web pages and coordinating printing jobs.

Among OSDL's priorities is increasing use on PC desktops, accelerating a version for telecommunications and developing Linux for more intensive data-center roles, such as hosting databases and handling corporate operations.

Server sales are crucial to Microsoft, not just because they accounted for more than 20 percent of its $36.8 billion in sales last year. Servers give the company a foothold in data centers and help the company to sell other products in its line.

Microsoft also needs to keep a big share of the market to keep programmers interested in its products.

Strong loyalties

Linux is more than just another product competing with Windows. There's practically a religious war under way between the world's largest software company and supporters of Linux and other freely shared software. The competing icons in this battle are Microsoft Chairman Bill Gates and Torvalds, and they now live close enough to have lunch together — if they wanted to.

Some saw the battle coming. Back in 1976, shortly after Gates and Allen started Microsoft, Gates was outraged to learn that enthusiasts were sharing copies of the company's BASIC software program. He issued "An Open Letter to Hobbyists" demanding compensation.

Gates' letter was a milestone in the evolution of software from an academic and hobby pursuit into one of the world's most profitable industries. Yet some, including Torvalds, still believe software should be free.

Under the licensing terms attached to Linux, anyone can download the software and tinker with it, but they have to share any improvements they make to the underlying system.

Companies make money by selling customized versions, providing support to customers and selling computers bundled with Linux.

"We like to say nobody makes money on Linux, people make money around Linux," OSDL marketer Pratt said. "We are not socialist about this at all — all of our member companies are capitalist, they're all for profit, and their goal is to make Linux a viable part of the [information-technology] solution stack in a way that makes economic sense."

He compares it to a bike shop where customers can take what they want from a pile of parts, "but if you want me to put it together for you, I'll charge you $100."

It remains to be seen whether Linux will spawn more companies and jobs in Portland. Frye sees opportunity to help the region grow but doubts the software will affect his hometown the way Microsoft did in Seattle.

"Lots of people will get rich on Linux, but it's unlikely to be ... in any one single location," he said. "Portland will be a place that can take advantage of this, but it's a worldwide development community. There are multiple places where you can do this. It's different than 20 years ago; the Internet has changed everything in terms of locality."Brier Dudley: 206-515-5687 or bdudley@seattletimes.com

Copyright © 2004 The Seattle Times Company

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