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Linux and B2B; not quite yet

Author: JT Smith

by Jack Bryar
NewsForge Columnist

In the last week or two, I’ve seen a lot of optimistic projections
concerning the degree to which Linux and Open Source software have
grabbed mind and marketshare. This has been a great year by any measure.
But declarations of victory, even in the Web server marketplace, may be a
little premature.Has Open Source taken over the Web server marketplace? The folks over
at Slashdot got
pretty excited
the other day over an analysis of “active” Web sites
conducted by Netcraft.
According to Netcraft, Linux has already surpassed Windows as the
platform of choice among active Web sites. According to the Netcraft
survey, Linux has a 35% share compared with 21% for Microsoft and 20%
for Solaris. According to Netcraft’s numbers, Apache beats out
Microsoft’s IIS server by three-to-one. I found that pretty exciting. I
also found it surprising. I talk to literally hundreds of Web operators,
and I wondered why I didn’t see numbers that compared to those at the
Web sites I see on a regular basis.

So I did a little checking on my own, among the fastest growing
commercial sector of the Web, and I got different numbers.

The reason I look at the commercial sites is because that’s where the
money is. The commercial Web sites are the ones that buy the most IT
equipment, and the most services. If you haven’t been paying attention
recently, the newest, hottest, most hotly hyped sector of the commercial
Web has been those businesses that provide services to other
businesses — the so-called “B2B” marketplace.

Several months back, Forrester, The Gartner Group, and several other
consulting houses published forecasts of the web marketplace. All of
them came to the conclusion that the B2Bs were going to grow faster
than any section of the Web marketplace, and that they would quickly
overwhelm the Internet consumer market. While the analysts disagreed on
which vertical B2B market was going to be the most significant, they all agreed B2B was going to
be HUGE.

How Big? Forrester has the value of B2B construction and industrial
supplies and construction markets exceeding $200 billion by 2004.
According to Forrester, the automotive, petrochemicals, food, and
agriculture markets will be even bigger. While I thought that
Forrester’s numbers were rather optimistic, The Gartner Group did a
study late last year which claims that distributors are already doing
$145 billion in “net transactions” with retailers. According to Gartner,
this number will jump to an astounding $7 TRILLION in five years.
Studies by Gartner, Boston Consulting Group, and Forrester all see B2B
transactions in several market sectors growing anywhere from 1500% to 5000%
over the next few years.

Even if you doubt these projections, there’s a big market developing
here. Skeptics and believers agree that the B2B sector is likely to
drive the market for web equipment and services over the next several
years. Whatever this market adopts as its configuration should become
the standard for the larger commercial web marketplace.

So what is these B2B sites currently using for servers and operating
systems?

Over the couple of weeks I had a chance to find out. I was involved
in a project that required me to visit and evaluate more than 250 B2B
Web sites. I concentrated on the retail, construction, agricultural and
food sites, as these verticals seemed to have the most vibrant
operational businesses. I spoke to a number of webmasters and technical
personnel to find out what they had for infrastructure, and what their
plans were, going forward.

I also used Netcraft’s nifty
little Web probe to see what these sites were using on their public Web
servers.

As Gartner and Forrester predicted, these sites are growing rapidly,
both in size and in number. Several of them had come online only in the
last few weeks. Perhaps as many as half were still scrambling for funds.
But they were growing at dot-com rates, and most had the red ink to prove
it.

The venture capital community has been pressuring many of these sites
to narrow their focus. A lot of sites are beginning to specialize by
product line. An example is e7th.com, a fashion-oriented B2B that has
become a specialist in the shoe industry. Other sites are trying to
master just one or two services; CloseOutNow helps
apparel retailers liquidate excess inventory. Yet many others are trying
to do a lot of things simultaneously; the Cyber Merchants Exchange, or CM-E, has
announced they will have a wholesale auction center, a “virtual trade
show,” serving the industry, an outlet mall for retailers to vend their
excess inventory, and, ultimately even a consumer web presence.

A lot of these B2B sites feature management teams with impressive
credentials. The CM-E management team came mostly from Carter Hawley
Hale Stores, the corporate parent of Neiman Marcus and Waldenbooks, among
other chains. Unfortunately many, if not most, were a little thin in
terms of technical expertise; a six-month gig with Oracle was good
enough to land one manager his job as company CTO. Even companies with
solid tech credentials such as the many firms who were trying to develop
ASPs and specialty software programs had run into critical
manpower problems. Many companies were scrambling to outsource as many
of their tech functions as they could.

So what were these fast growing companies using for web servers and
Operating Systems? Hint: It wasn’t Linux.

It wasn’t that clients weren’t interested in a free operating system.
It was simply that many of them simply used whatever system their CTO
was most familiar with. A lot of firms were spin-offs, either of
brick-and-mortar distributors or of specialty
software firms
. They might be new — in fact most are less than 18
months old — but their operating systems reflected the computing
environment at their parent companies. In many other cases, they adopted
whatever system their new CEO or chief IT partner was most familiar
with.

Of the 63 retail B2B websites I examined, nearly half were running an
IIS server over an MS Windows platform; a third were running Solaris,
usually with either Apache or a Netscape Enterprise Server. Seven firms
were using Linux. Four were using BSD. The rest were running on
platforms ranging from Macs to Compaq True64 Unix and even an IRIX box.
Sixteen sites ran Apache servers. Twenty-seven used IIS. Ten ran
Netscape. The rest were scattered among a half dozen other products.

The retailers knew a good bargain when they saw it. By comparison,
seven of the 10 prominent agriculture B2B sites were running IIS on
Windows. In fact, only the chatty farming news Web site, FarmPage, was running on an Open
Source platform — An Apache server over BSD. Of the 19 B2B sites
I found specializing in the food industry, 10 were running on a Windows
platform. Four used a Solaris platform. Three were running either Linux
or BSD. I looked at more than 43 B2B sites specializing in either
construction, industrial equipment or building materials. Twenty-six of
these ran their public Web site on NT or Win2000. Ten relied on Solaris.
Three used Linux — B2Build, BuildScape, and Construction Net. BuildersCentral was using
BSD.

Now admittedly, many firms run a variety of platforms, and more than
a few are using completely different configurations for their secure
sites than they are on their more public sites. And most of the CTOs I
talked to weren’t really eager to talk about how their secure sites were
constructed. But anyone who thinks that Linux has “caught up” with
Microsoft needs a quick reality check. It hasn’t happened yet.

But it might. The retail people I spoke to were terrified about
security. The majority I spoke to were more concerned about Microsoft
security than Linux security. They were also terrified about costs.
Margins in the B2B space are shrinking rapidly, even before many of
these sites are operational. Free sounded good to a lot of them, but
they also were concerned about whether Linux could scale to meet their
imagined future requirements. The older managers I spoke to hadn’t used
Linux, and their lack of familiarity was a real barrier. For all that,
Linux, BSD, Apache, and the whole idea of Open Source software has
gained acceptance among many of the firms in this burgeoning market.
It’s far from a majority however, and Open Source evangelists need to
keep that in mind.

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