SAN FRANCISCO - In the hopes of displacing the dominant Windows operating system, IBM ( IBM) is corralling its Linux partners into a concerted push to get desktop Linux off the ground.

As LinuxWorld kicked off Tuesday, Big Blue announced it is working with Novell ( NOVL) and Red Hat ( RHT), commercial vendors of the open source operating system, to deliver a bundled alternative to Microsoft's ( MSFT) Windows.

Canonical, which sells subscription support for its popular Ubuntu free Linux operating system, is also joining the party. Canonical provides paid support for its version.

IBM's announcement -- to deliver to hardware vendors and integrators a package of operating system and application software ready for preloading onto PCs -- was one of several that is intended to push Linux adoption across the board.

Integrators - including PC vendors - will be able to bundle IBM's Lotus collaboration software and Symphony desktop-productivity software with the Linux OS from any of the three vendors.

Announcements from PC hardware makers are coming, says Inna Kuznetsova, director for IBM's Linux strategy. Earlier this year, Austrian integrator VDEL configured a PC with IBM's collaboration package on Red Hat's OS for the Eastern European market.

IBM has made a big bet on Linux over the past decade, pouring investment into its development and commercialization. In that period, the operating system has made limited headway replacing Microsoft's operating system and applications inside companies.

Microsoft executives suggested recently that the open-source threat to the Windows franchise has largely been neutralized. Even with IBM's staunch support for the Microsoft alternative on servers, Linux for the desktop limps along.

Gartner estimated in April that the installed base of Linux PCs will grow this year by 16% to 19.4 million worldwide. In contrast, the installed base of Windows desktops will grow more slowly but on a much bigger base: a projected 11.4% year over year to 1.05 billion PCs. Of that number, 311 million are Vista. Apple ( AAPL) is doing a little better: Macs with the Apple operating system will grow by 11.6% to 28.2 million.

While total installed OS-equipped PCs are expected to grow at 11.8% in 2009, Gartner sees Linux PCs growing by just 10% to 21.4 million, vs. 11.7% for Windows to 1.18 billion. Mac OSs are projected to grow by 17.1% next year to 33 million.

"We are starting to see a lot of interest from very sizeable customers" in the emerging markets of India and China for a viable alternative to Windows on the desktop, John Dunderdale, IBM vice president of sales for Lotus, said in an interview.

"We fore see a huge uptake in the mid-market to running Linux" based on the work IBM is doing with its partners, says Kuznetsova.

Among server operating systems, adoption of Linux by the mid-market, which includes small businesses, has lagged large business use because of the higher level of IT support Linux requires, Kuznetsova says. The perceived complexity and support needs have held back adoption, she adds.

IBM's answer is to do some of the integration work or provide its reseller partners with newly announced toolkits that make it easy for them to bundle and preconfigure Linux software and hardware.

To make Linux more attractive to small businesses, IBM announced Tuesday it is preloading Novell's SUSE Linux Enterprise Server 10 onto IBM's Lotus Foundations -- a hardware and software server for businesses as small as five employees. Foundations features IBM's collaboration, productivity, security and networking software, as well as back-up and disaster-recovery capabilities.

Foundations requires little or no integration and can be remotely maintained by resellers at minimal cost via maintenance contracts. IBM estimates the Novell-equipped Foundations will run about 25% less than Microsoft's comparable Small Business Server.

IBM began selling Foundations earlier this year. Executives declined to make revenue predictions for any of its announcements.

"We don't know" if Foundations and the other initiatives will spur greater adoption of Linux, Bob Sutor, IBM vice president for open source, said in a press conference. "It's an area we're very excited about. But we can't tell how much open source" software will be used by small and medium-sized businesses in 10 years, he added.

Kuznetsova sees the bigger revenue opportunity among Tuesday's announcements coming from a new release of z/VM 5.4 -- virtualization software for Systems z mainframes running Linux -- allowing modifications to the systems while they are in use. "z/VM helps IBM increase sales of mainframes on Linux," says Kuznetsova. "This is a powerful revenue-driving tool for us."

IBM closed up $1.31, or 1%, to $128.87.

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