Linux: Belle of info appliances?

The fairy-tale ball this time is the very posh information appliance market.

Alluring, with its lack of license fees, open-source code and hordes of Web-savvy developers, Linux has been making serious inroads into a market that giant Microsoft Corp. (Nasdaq: MSFT) hoped to make its own with Windows CE.

Microsoft's problem: With info apps, no one cares about the OS's brand name. "The embedded OS market is a place where users have no idea what operating system they are running," said Chris Le Tocq, research director for industry watcher GartnerGroup Inc., who added that, because brand makes little difference, other factors -- such as price and developer support -- become most important.

Linux: Free and supported
Both areas are where Linux can compete. "If you are in a business where you are predicting to sell significant quantities of a product, then (an OS with license fees such as) Windows CE is problematic because of cost," Le Tocq said. That makes Linux -- which is free -- much more attractive.

Ask Mr. Linux himself, Linus Torvalds, the Linux creator now working as a software engineer for chip maker Transmeta Corp.:

"Linux is great for pilot projects where you don't know what will happen," Torvalds said. "You don't have to apply for a source license. I think that the whole openness is a real benefit. People are aware of the fact that they can do local changes without fighting about it."

For the same reasons, Sony Corp. (NYSE: SNE) uses Linux-based computer systems to develop applications for its next-generation entertainment console, the PlayStation 2.

Linux on your TV
A few Linux-based devices are already on sale. For instance, personal TV maker TiVo Inc.'s personal video recorder -- currently available from Philips -- runs on the freely available OS with custom software created within the company.

"We have the source, so we are not tied to anyone else in terms of getting our product out the door," said Jim Barton, chief technology officer and vice president of research and development for TiVo, and the man behind the decision to adopt Linux for the personal video recorder.

As devices become more and more complex -- at least to the engineers -- that consideration will count for much, he said. "I believe that in 10 years the kind of computing power and complexity that will go into your TV will exceed that on your PC. Your stereo ... is going to have 10 million lines of code in it."

Not that any user of TiVo's personal video recorder would know it had Linux inside. The fact that the recorder runs on Linux only becomes apparent when users browse TiVo's Web site, rather than surf TV channels. In the same way that consumers consider 3Com's Palm organizer a device and not an OS, most consumers only care about the personal TV service, not what OS runs the "applications."

Chip maker National Semiconductor Corp. (NYSE: NSM) believes this so much that the company is offering its information appliance platform -- dubbed the WebPad -- to potential manufacturers with any one of three operating systems: Linux, Stinger from Be Inc. (Nasdaq: BEOS) and the less-well-known PSOS.

At the Consumer Electronics Show earlier this month, Sun Microsystems Inc.'s digital living room demonstration used a WebPad running Linux as an alternative to the PC. "Once the market starts shaking out, the operating system is not going to be a big issue," said National Semiconductor spokesman Paul Barbieri.

Linux's Catch-22
For Linux, that amounts to a Catch-22. Linux could succeed in grabbing a large share of the information appliance market, only to be relegated to an obscure footnote in the product manual.

Instead, companies will have to offer Linux solutions as a service to consumer electronics manufacturers.

Chip maker Intel Corp. (Nasdaq: INTC) sees itself going this route. At the Consumer Electronics Show, the chip giant unveiled its plans to sell Web-connected info apps under the Intel brand name that run on Linux.

"We like to put ourselves in the business of providing complete solutions to our customers," said Marta Hasler, strategic marketing manager for the Santa Clara, Calif.-based Intel. "On the services side we are playing the role of a building-block provider. We are looking at what people want to do, then we put together a tool kit of different service options."

While OS maker Be has its own software that it hopes to sell, its chairman and CEO, Jean-Louis Gassée, agrees. Be recently announced its intention to focus its efforts on creating an operating system tailored for info appliances. And, this week, the company plans to release more details of the Stinger OS. Gassée believes Be's ability to develop specific solutions to customers faster than they could develop a Linux solution to be a big advantage.

The reason: Adapting Linux to information appliances and mobile devices is not easy. "A lot of people come to us after they tried Linux," he said.

Likewise, much of an OS's success in the market will depend on how many developers can work with it. Intel has more than 100 in-house developers working on its Linux-based platform. Companies such as Caldera Inc.'s spinoff, Lineo Inc., are cropping up to focus solely on slimming down Linux to a size capable of running on various platforms. And, on Monday, Linux developer Red Hat Inc. (Nasdaq: RHAT) plans to announce that it intends to also play in the information appliance space with the release of an embedded Linux development system.

Some of these Linux-powered products are not even true information appliances. "Basically, the less we look like a computer the more we are interested in," said Jennifer Finlinson, spokeswoman for Lineo, who added that gas-pump credit-card verifiers, medical equipment and other industrial applications -- as well as set-top boxes and PDAs -- can all be run with Linux.

In the end, the massive development effort behind Linux makes it a prime candidate for the information appliance market, but no single OS will dominate.

"There are so many operating systems that can fill different niches that there is enough room out there for all of them," said Kevin Hause, industry analyst with market researcher International Data Corp.

"I don't think we will see any other operating system -- be it Linux or someone else -- establish a chokehold on the market."