IBM and Linux (A) Harvard Case Solution & Analysis

IBM and Linux (A) Case Solution

Problem Diagnosis

The member of the business team and emerging technologies of IBM, Dan Frye was facing the situation to make a final strategic decision which related to making a strategic alliance with the Linux Development Community. Two years ago, IBM had a very good experience with Apache as a web service programmer for the IBM’s open source software program. IBM had chosen Apache at this time for the website of the Atlanta Summer Olympic Games.

Therefore, looking at the success between this alliance between Apache and IBM, the business team members of IBM had started to think that Linux could be critical in the right strategy selection for IBM in such a network centric computing environment. All the executives had already been aware to the virtues of the open source program with the first alliance with the Apache Company. Moreover, the executives of IBM were also aware of the business benefits that could be easily derived from the strategic alliance between the IBM and Linux Development Community and this could simply be achieved by using open source software in the installations of IBM.

This is the reason due to which Frye and his colleagues have to now make a decision and decide that whether a strategic alliance between IBM and Linux Development Community would come out in a way to serve the best of the interests for both the companies after identifying the potential challenges and benefits for both the parties and how IBM would come out to manage its alliance with the software developers loosely affiliated group.

Analysis

A detailed analysis of the potential risks, benefits and the barriers has been performed and then a range of the options have been considered for IBM to make the most optimal decision looking at the current condition of IBM.
Attractiveness of Alliance to IBM

In the year 1998, the CEO of the company had stated that the PC era had ended and that the company was entering into a network centric computing environment. Gerstner at this point believed that the only way to success for the company is through flexibility and the speed to deliver to the market what the market wants in order to value the customers of the company. Moreover, the alliance with Apache had proved that this was the right approach which was suitable for IBM in such a network centric computing environment.

There were many open source communities available in the market however; the Linux Development Community had its own conventions and norms. Therefore, there were many reasons due to which this alliance was attractive to IBM. Linux Development Community was attractive for open source software for IBM because it was not at all owned by any other corporate entity and it was a neutral platform. Thus, no strategic vulnerability would be created by any of the other corporations and the software of IBM could easily be run on the top of Linux.

IBM used to support open standards and therefore, this was also consistent with the strategy of IBM. Moreover, the growth potential of Linux was strong and significant and it was penetrating into the lower end server and the PC markets rapidly. All of the consumers who used it were satisfied with its high performance. Most of the recent bench marking studies had placed Linux equal to the Windows NT due to the reliability of the system and the speed. Lastly, the operating system was free and the source code was open therefore, it was easy for any of the licensee to modify the source code and this could be done easily without violating the copyrights of the licensor.................

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