IBM in 2004: The Linux Option

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Case Details:

Case Code : BSTA110
Case Length : 11 Pages
Period : 1952 - 2004
Organization : IBM (International Business Machines)
Pub Date : 2005
Teaching Note :Not Available
Countries : USA
Industry : Information Technology

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Business Segments

IBM provided various services that included business transformation consulting software, hardware, fundamental research, financing and the component technologies used to building larger systems. IBM's major operations comprised a Global Services segment; three hardware product segments - Systems Group, Personal Systems Group and Technology Group; a Software segment and a Global Financing segment...

The Rise of Linux

Linux had originated from another operating system UNIX, designed by AT&T in the 1970s. UNIX had a unique, modular, file-based structure that allowed the system to evolve in piecemeal fashion...

Betting on Linux

IBM realized that there was a need to embrace Linux not only to win customers but also to challenge the dominance of Microsoft. By the late 1990s, the company earmarked $1 billion to develop products based on Linux. By the 2000s, IBM and its business partners together developed a combination of hardware, software and business expertise based on Linux...

Taking on Microsoft

Microsoft had done its best to put down the Linux uprising. In 1999, the company created a Web site under the heading "Linux Myths" that questioned Linux's performance and reliability. In June 2001, CEO Steve Ballmer labeled Linux a "cancer" because open-source rules impinged on intellectual-property rights...

The Road Ahead

IBM had sent out clear signals that it was serious about Linux. IBM Global Services had trained 3000 people in Linux and launched various services to help customers migrate to Linux. IBM had also begun to use Linux internally...


Exhibit I: Key Numbers
Exhibit II: IBM - Business
Exhibit III: IBM - Selected Financials


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