Ubuntu's rising revenue makes a small dent in Microsoft

Microsoft may not be exactly suffering right now, but as The VAR Guy notes, Ubuntu's success in the netbook market is having a material, albeit still small, effect on Microsoft's pricing power and profits.

Sorry about that, Redmond.

Ubuntu, which now claims eight million active users, is also starting to make serious money for its commercial parent, as Chris Kenyon, Canonical's director of Business Development, tells InternetNews:

We're not sharing our revenues publicly but I will say revenue growth is extremely strong and we're bullish across the board both at server side and desktop. The difference between now and even 12 months ago in terms of size and volume of deals coming through is a big difference.

Canonical has a long way to go before it catches up with Red Hat's 2.5 million paid subscriptions to Red Hat Enterprise Linux, but at its growth rates could it challenge Novell SUSE for the number-two Linux slot? It could happen.

In the near term, however, it's nice to see Microsoft getting some real competition. Maybe the largely Ubuntu-based netbooks competition will mean that Microsoft will deliver something vastly better than Vista to market in the next year or two. If so, maybe Steve Ballmer will be sending Ubuntu's Mark Shuttleworth a thank-you letter next year.

[Mark_Anderson]

8 million you say? That must be getting close to 1% of Microsoft's user base.

Wow!

[Ballmerrocks]

You would need a microscope to see this dent! Really people this is one HUGE stretch! Linux will never be a threat to us!


http://fakesteveballmer.blogspot.com

[mirko1pan]

This article is really a long stretch. Let's hear what Mark Shuttleworth, the founder of Canonical, has to say on the subject of Ubuntu profitability: "Canonical is not cash-positive, but our offering is very attractive to those who want to pinch their pennies in the Linux space." "I don't think it would be possible to make a lot of money, or even any money from the Linux desktop".
So, let me get this right: Canonical is NOT making any profit, it's founder doesn't think it will (not from selling the desktop), but it's putting a dent in the M$ armor. Ahem. If you say so...

[odubtaig]

You not heard of a loss leader?

[Seaspray0]

How big of a dent? Are we talking a dent similar to hitting a car fender with a sledge hammer or a dent similar to hitting a granite boulder with with a paper clip? I've seen the market share just like you have, and it's taken 14 years since 1994's "year of the linux desktop" to get beyond the paperclip. As they would say, all things are relative. From what perspective do you consider this a dent?

[mhilarius]

There is little use of Ubuntu on netbooks.
By far the largest installed base is on the ASUS EEE PC and that is Xandros, and NOT Ubuntu.

Yes, LINUX penetration is pretty big in these machines.
And, for good reason.

The Microsoft Tax is notably visible on most netbooks.
With limited configuration choices, there is not much space for vendors to hide the added costs of M$ software.
Typical netbooks with Windows have less disk space, lower performance storage, less RAM , than their Linux equivalents.
Xandros success is starting to show.
They recently acquired Linspire.

[streamxy]

I think being arrogant sometimes not too good either. I think it time to think why your business need to make Microsoft rich. In my latest post I had talked about 6 basic application that enough for small business operate effectively.

I personally think using just this 6 application (well, in most cases this are our small business daily task) will give Microsoft some pinch or nudge.

http://www.streamxy.com/2008/10/31/6-reasons-why-your-business-need-to-switch-to-ubuntu-linux-810/

[uga2]

For those who cannot read. The claim is not that Canonical makes money (it was a side note). The point is that Ubuntu has 8 million users that could otherwise be Windows users (8 mln x 160$ Vista Home Basic = $1.28 bln). Considering that part of it was installed on top of Windows the net effect may not be that dramatic. Nevertheless, much of it is a lost opportunity for M$, but not necessarily a money-maker for Canonical. Canonical has its own plan. The fact that Ubuntu causes problems for M$ is merely a side-effect. Even a fraction as small as 10% of the number above counts as a significant impact.