GTSI Alliance Highlights Growing Government Linux Opportunities

By Lisa Terry, Contributing WriterGovernment Technology Services Inc. is positioning itself to capitalize on growing federal government interest in the Linux operating system by inking a deal to resell Red Hat's Linux and related support services. The Chantilly, Va.-based government IT provider had already been selling Linux-related hardware and services prior to the formal agreement.Red Hat Linux has been added to two GTSI governmentwide acquisition contracts so far: National Institutes of Health's ECS-2 and NASA's Scientific and Engineering Workstation Procurement (SEWP-2). Other contracts are pending."We've had a number of customers express interest in it and they've asked us to make it easy to buy the product," said Dendy Young, chairman and chief executive officer of GTSI. By forging a formal relationship, "the supply chain is strong and properly established, and the pricing infrastructure is in place." The agreement with Red Hat is already benefiting GTSI's stock price. Announcement of the deal, which was finalized Jan. 25, sent the reseller's share price to $5.38 Jan. 28, up from the price that has stood since October of around $3. The stock's 52-week low was $2.44.GTSI revenue for the nine months ending Sept. 30, 1999 was $468.8 million. Net earnings totaled $900,000 over that period, according to Hoover's Online."We've seen a lot of opportunity in this space and this allows us to fulfill that need," said Lisa Sullivan, director of channel sales at Red Hat. "We're primarily going to service the government through channel partners such as GTSI," limiting the play to about four to five partners, she said. The move is yet another marker for perceived growing government interest in Linux, an open source operating system derived from Unix that enables users to access and modify its 1.5 million lines of source code.Some have speculated that the Justice Department's ongoing suit against Microsoft is tilting federal contracts toward Microsoft competitors, such as the department's recent licensing of 55,000 Corel WordPerfect software seats. If that belief bears out, the Linux operating system could fare even better in this market space.But it is still early. "We think Linux is really an early adopter stage product," Young said. "Folks likely to adopt it are technically competent, such as government lab organizations and [chief information officer] offices." Government usage of Linux has already been reported within the Department of Energy, the Postal Service and National Institute of Standards and Technology, among others. Contributing to the operating system's appeal are its low total cost of ownership, stability and rapid development cycle; users' proposed changes are quickly peer-reviewed and tested. Lack of applications, scalability limitations and inconsistent graphical user interfaces have been cited as Linux weaknesses in the past.Linux will appeal in particular to "government customers who have a lot of background in Unix," added Red Hat's Sullivan. "They get Unix flexibility at a low price point" and can grow systems quickly without platform and migration concerns.Many hardware and software suppliers that sell to government have jumped on the bandwagon with Linux versions; leading commercial application areas are Web application development, administration and deployment; network management; enterprise applications; custom applications; and databases, according to a report by Miller-Freeman.Research firm International Data Corp., Framingham, Mass., has projected that Linux will grow faster than all other operating systems combined through 2003. Red Hat, Durham, N.C., has been a major driver behind the operating systems' success.In addition to the operating system software, GTSI will be offering a range of related services enabling agencies to choose their own level of support, from minimal on up. Offerings include advanced sever-based tech support, developer support, consulting services, VIP onsite support and reseller program kits. Lack of the support services common to vendor-designed operating systems has been another impediment to widespread Linux adoption.