BRIC by Brick; IBM looks to open source in emerging markets

IBM plans to open more than a dozen development centers in Brazil, Russia and China, offering open source solutions support. Analysts say this underscores Big Blue's commitment to both Linux and expansion in BRIC markets.

To strengthen its position in the growing BRIC -- Brazil, Russia, India and China -- marketplace, IBM recently unveiled plans to open more than a dozen new development centers in Brazil, Russia and China over the next three months.

Dubbed "Innovation Centers," the new locations will provide developers and business partners with access to IBM's technical skills, resources and business expertise.

IBM currently runs 25 innovation centers worldwide, with technical consultants providing assistance for migrating, developing and implementing open source systems on IBM hardware and software. The centers are set up to help partners and developers test, port and validate applications across platforms using open source software. IBM also plans to offer workshops and technical seminars for development skills and technology advancements.

BRIC countries have the biggest number of potential customers and the largest potential income and customer growth.
Charles King
Principal analystPund-IT Research

Big Blue is hoping to take advantage of some the world's largest untapped IT markets -- markets not weighed down by existing proprietary technology -- by offering innovation around the adoption of open source solutions such as Linux.

"There are so many places in China that never even ran phone lines, so they can go straight to wireless," said Mark Hanny, IBM's vice president of independent software vendor alliances.

But greenfield hardware environments are not the only encouraging factor.

IBM has found success pushing open source software into emerging markets because those governments often favor Linux over proprietary counterparts. IT market research firm International Data Corp. estimates that the Chinese government was the largest buyer of Linux in 2004, accounting for 28.2% of Linux server sales.

According to Hanny, emerging markets have evolved quickly from PC-driven sales to a combination of software, hardware and services over the past few years. He said the principal reason governments in these markets have been so supportive of Linux and open source standards is because they aren't weighed down by a mindset dominated by legacy technologies.

"BRIC countries have the biggest number of potential customers and the largest potential income and customer growth," said Charles King, principal analyst for Pund-IT Research. "Interest in technology far exceeds execution thus far."

But Hanny insists that IBM isn't viewing the BRIC market as "today's hot topic." He points to the thousands of IBM employees on the ground in these markets as proof that the company is committed to fostering relationships for the long haul.

"This is not a short-term strategy by any means," Hanny said.

According to King, IBM has a leg up in the BRIC market because it has had a presence in many of these countries for almost as long as IT has existed, and because backing up its commitment to Linux with action. That's important, King said, because many emerging market governments find the idea of proprietary software culturally distasteful.

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How much IBM can expect to make off its partnerships in the BRIC market in the near future is up for debate. But if all goes according to plan, King said there could be a significant payoff for Big Blue down the road.

"Moving into an emerging market, there's always going to be a lot of dice-rolling. It's uncertain how much overall profit a company is going to see," King said. "The profits will come later, and when they do they could be substantial."

Let us know what you think about the story; e-mail: Luke Meredith, News Writer

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