A division of the German Finance Ministry has moved its back office operations to mainframe computers that run Linux, in the latest victory for the upstart operating system in Europe, International Business Machines Corp (IBM) said recently.

IBM said that the finance ministry department, which is responsible for paying public sector employees and for managing certain taxes, installed two large IBM mainframe computers that run both IBM?s operating system and Linux.

Linux is open source software, meaning that its code can be freely modified. The computers replace 30 computer servers from Sun Microsystems Inc and Fujitsu Siemens that run versions of the popular Unix operating system that Linux is based upon, IBM spokeswoman Sandra Dressel said.

?The IT (information technology) industry is consolidating around two vendors ? IBM and Sun ? and we look forward to continuing to go toe-to-toe with them,? said Larry Singer, Sun?s senior vice president, global market strategies. ?HP (Hewlett-Packard Co) is increasingly seen as the big loser.?

Linux is currently at the center of a lawsuit filed in the United States by SCO Group Inc, which is suing IBM, saying that it is shipping Linux computer systems with software that contains code that belongs to SCO, which owns the Unix operating system. Meanwhile, Linux is making headway in Germany. In May, Linux won a head-to-head contest with Microsoft when the city of Munich opted to switch its operating system to the open-source software, after Microsoft Corp.?s (MSFT.O: Quote, Profile, Research) Chief Executive Steve Ballmer had personally campaigned for the contract.

The German government has also decided to install Linux in other departments, including 11,000 police computers that are to be switched from Microsoft Windows this year in thestate of Lower Saxony.