August 6, 2002 4:40 PM PDT

Study: Linux sales down, but not out

Linux sales lost some ground to Windows last year, but they're expected to climb in coming years as distributors of the alternative operating system create new revenue streams.

According to market research firm IDC, Linux sales declined nearly 5 percent in 2001 to $80 million, but are expected to grow to a $280 million market in 2006.

Meanwhile, Windows sales climbed 11 percent to more than $10 billion last year, according to IDC analyst Al Gillen.

"The Linux operating system market, from a revenue perspective, accounts for one half of 1 percent of the total operating system revenue each year, or roughly two days' worth of Microsoft's operating system revenue," Gillen said. "On the second day of January, Microsoft had generated more operating system revenue than the Linux community (will for the entire year)."

IDC based its projection of $280 million in sales within four years on efforts by Red Hat, SuSE and others to wring more money from Linux, in part by making it more difficult for users to obtain the software for free, Gillen said. "What we're expecting the revenue to come from is the fact that the Linux vendors are moving toward a model where they're trying to drive revenue per server," Gillen said.

For example, Red Hat doesn't offer downloads with which others can easily create installation CDs for its high-end Advanced Server edition. And while the software may be installed on multiple computers--unlike Windows--Red Hat charges per server for subscriptions to the Red Hat Network for online services.

While experts still can assemble the required Linux components for free and create the same package that companies sell, customers will be leery of using that sort of customized software, Gillen said.

Linux, a clone of the venerable Unix operating system, began 11 years ago as the programming project of Linus Torvalds, but now it is collectively developed by hundreds of programmers across the globe. Linux has gained real-world credentials, most prominently as a central part of IBM's strategy to compete with Sun Microsystems and Microsoft.

Linux is an open-source project, meaning that it's free to share, change or distribute its underlying programming instructions, called source code. In contrast, tight controls govern who may see and change the source code of operating systems such as Sun's Solaris and Microsoft's Windows.

During the dot-com mania, Linux was one of the hot trends that captured investor attention. The first Linux company to hold an initial public offering, Red Hat has solidified its role as the dominant Linux specialist.

Red Hat garnered nearly three-quarters of the revenue in 2001, Gillen said. "The rest of the players are bit players. Most of what's left is held by SuSE. Everyone else is in the low single digits or smaller," he said.

Linux is best suited for use in servers, the higher-end computers that often run 24 hours a day handling tasks such as corporate e-mail. Most Linux revenue came from this market, Gillen said.

IDC declined to release the numbers of copies of Linux that were sold, but said the number stayed about level from 2000 to 2001. The number of copies that sold for "client" computers such as desktops and workstations, however, increased nearly 50 percent over 2000, in particular in Asia and Latin America, Gillen said.

Another ally and supporter of the Linux movement is Intel, which is using Linux to help drive adoption of its Pentium, Xeon and new Itanium family processors into servers. The vast majority of Linux is used on Intel processors, Gillen said.

 

Join the conversation

Add your comment

The posting of advertisements, profanity, or personal attacks is prohibited. Click here to review our Terms of Use.

What's Hot

Discussions

Shared

RSS Feeds

Add headlines from CNET News to your homepage or feedreader.