IBM CEO: ‘Closed Architecture’ Threatens E-Commerce

IBM chief executive Louis Gerstner warned an international audience at a meeting of the United Nations-sponsored Telecom ’99 that “any customer, or nation, that gets trapped by a closed architecture runs the very real risk of being left behind.”

The meeting was held Sunday in Geneva, Switzerland.

“There are a few people who still don’t get it, who are still trying to propagate proprietary computing and communications technologies in order to exert control,” Gerstner said. “I think their motives are obvious. But my view is that they are standing on the wrong side of history. The e-Business economy, universal access, the transformation of institutions and markets — all depends on open, standards-based technology.”

Microsoft Operating System Still Closed

Some industry observers speculate that Gerstner could have been taking a shot at rival software giant Microsoft Corp., which is waiting for the outcome of the antitrust suit brought against it by the Justice Department and 19 states.

During the 76 days of trial testimony, IBM executives were called as government witnesses and delivered some damaging testimony against Microsoft.

Nonetheless, even with an e-commerce landscape threatened by closed architecture, Gerstner said he foresees a positive horizon.

“The good news is, movements like Java and Linux are powerful reminders that those who bet on proprietary standards are not going to win in a heterogeneous, open networked society.”

Open Standard Backed By Giants

IBM, along with other industry giants such as Hewlett-Packard, have invested heavily into Red Hat, Inc., the maker of a commercial version of the 12 million-user-strong Linux operating system. So far, it is the only real challenger to Microsoft’s Windows NT. Linux, which was developed by hundreds of programmers collaborating over the Internet, is also popular among researchers who praise its speed and reliability.

Bright Future For ASPs

During his speech, Gerstner also predicted a bright future for Application Service Providers.

He said the computing workload would shift from PCs to large server systems run over the Internet.

“We see this happening already,” Gerstner said. “First with smaller businesses who buy computing and applications on a hosted or utility model, paying for what they use, and leaving the management of systems and software to their provider.”

To underscore this point, Gerstner added that both Cable & Wireless and AT&T had both recently entered into this arena.

E-Commerce Will Continue To Soar

Big Blue’s top executive also told his audience that e-commerce could easily top $1 trillion (US$) in the next few years and export the boom across U.S. borders.

“Europe’s share of global Web commerce, for example, was 11 percent last year — headed to 33 percent by 2003,” Gerstner said.

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