Linux is booming, but unpaid adoption may hurt vendors
Even as the recession continues to cool CIO appetites for software purchases, Linux is bucking the trend, according to a new IDC report.
IDC is projecting Linux revenue to expand at a compound annual growth rate of 16.9 percent from 2008 to 2013, topping $1.2 billion in 2013.
As IDC notes, this growth will comprise just 4 percent of total software market revenue by 2013, up from 2.2 percent in 2008. However, for the second time, IDC has also examined nonpaid deployments of Linux, revealing some troubling data.
I've always assumed Red Hat's primary Linux competitor is Novell. And based on IDC's numbers, it does appear that Novell is increasingly a real threat to Red Hat.
But it is the nonpaid usage of Red Hat's software that may well pose a bigger risk.
Novell has 27.9 percent market share of paid deployments and 20.1 percent of the total paid and nonpaid market. This doesn't look so great at first glance; after all, more people use Red Hat (including Fedora) for free than pay for Suse Linux Enterprise Server.
However, in growth, Suse stands out. On paid shipments, Red Hat's 2007 to 2008 growth was 1.9 percent, while Novell's Suse was nearly double that at 3.5 percent.
On revenue, Novell comes in at 29.8 percent market share. That represents 50.3 percent growth in market share, versus Red Hat's 14.8 percent growth. Granted, Red Hat has a much larger base of revenue from which it's growing ($319.5 million compared with Novell's $112.6 million in 2007), but Novell's Linux revenue growth has outpaced Red Hat's since 2007.
I don't particularly like Novell's partnership with Microsoft to promote Linux, but it does appear to be paying off for Novell.
If Red Hat could elect to eliminate one competitor tomorrow, though, I'm wiling to bet that it would not choose Novell's Suse. It would choose unpaid Red Hat Enterprise Linux (RHEL), which accounts for a big chunk of the overall Linux market.
This may seem trivial, given that Red Hat earned a 62.2 percent share in the overall market for new license paid shipments/subscriptions, measured by deployments, or 64.7 percent, measured by revenue.
Sounds great, right?
Maybe. Intriguingly, Red Hat also claims 28.6 percent of the nonpaid market...for RHEL, its Linux distribution that should only be available to paid subscribers, but which many companies dishonestly use without paying (e.g., they may violate their contract by running more RHEL servers than they actually pay for).
Add Red Hat's paid and nonpaid deployments together, and Red Hat accounts for 47.6 percent of the global Linux market, whether users are legitimate customers or pirates.
It gets better (or worse, depending on your view). If one adds in the RHEL clone CentOS and Red Hat's own community distribution Fedora Core, Red Hat and its offspring dominate the global Linux deployments market with 57.1 percent market share.
This might not be so bad, if the trend were toward more paid Linux adoption, but it's not. While paid Linux server deployments will grow at an impressive rate, nonpaid deployments will grow even faster, nearly reaching parity with paid deployments in 2013.
Why this growth in nonpaid Linux?
Undoubtedly some of it stems from enterprises wanting to get something for nothing. Rather than pay for value, they attempt to cheat the system, leaving less money to help develop Linux.
But it may also be that the longer the world uses Linux, the less it feels the need to pay for it. Noted technology CTO Jon Williams once posed a dilemma to me at the Open Source Business Conference. He indicated that the longer his team works with an open-source project, the less need it has for support and maintenance from a vendor.
In other words, the minute the customer becomes profitable to the vendor is the same minute the customer no longer needs that vendor.
We could be seeing this in Linux. Still, the fact that they seem to be stealing RHEL rather than adopting Ubuntu or another "community-led" Linux distribution suggests that we're seeing enterprise IT attempt to cheat vendors rather than do without them.
All of which may mean that the world increasingly recognizes that Linux is a superior server operating system...and doesn't want to pay for it.
How comforting...and alarming. It's not as if Linux development costs nothing. Red Hat pays over $100 million each year to develop Linux, and it's not the only company making such hefty investments.
UPDATE @ 11:03 PT: For the reading-impaired: When I talk about "stealing RHEL" I'm in no way referring to CentOS or Fedora, as my post clearly states. I'm talking about using RHEL without paying for it. Not CentOS. Not Fedora. RHEL. Red Hat has a fair number of companies that actively underpay on RHEL: that is, companies use more RHEL than they are legally allowed to use as per their contract with Red Hat.
So, please read the post, and don't get worked up by the word "steal" and "CentOS" in the same post. I'm not referring to CentOS or other legitimate uses of Linux. I'm talking about theft of RHEL (which is what IDC is talking about, too. Maybe you should buy the report and read it before commenting so that we can have an informed discussion.
Follow me on Twitter @mjasay.
Matt Asay brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is vice president of business development at Alfresco, a company that develops open-source software for content management. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. You can follow Matt on Twitter @mjasay. 
And Mr. Dee, Linux IS free, even though your employer Microsoft doesn't like that.
Redhat and Novell and others sell support. Something that also costs money at MS.
Also, Redhat Enterprise can not be downloaded as binaries, but of course, since it is Open Source, as source code. That's how CentOS started. They download Redhat Enterprise source, compile it, and create a free binary distribution.
As a Linux user since 1993, I support the distributions I use by buying the DVDs with the distribution. But I can download them as well.
There are exceptions, though:
I keep up RHEL subs for the Oracle DB's, mostly because the PHB's get all nervous if you run their high-end DB's on, say, CentOS (why? Because in spite of it coming from the exact same source code, Oracle doesn't list CentOS as being supported - 'course, Oracle doesn't list any $0.00 distro of Linux as being supported, so...)
OTOH, the same PHB crowd seems to have no problems with my running the mission-critical NTP servers* on ordinary Debian, or in running our external DNS servers on FreeBSD, or a whole host of rather vital infrastructure bits on either of the two (and if it faces the Internet, Windows is never IMPO a first choice, primarily for security reasons).
* the reason I can call it as such is because we have other, more critical software, that is very time-sensitive, to the point where even a dozen-second delay between nodes can crash the whole shebang... so far, my little Debian solution (two timers and a 'reconciler') has done the job just fine for nearly a year, costing less than $3k total, whereas the original proposed solution would have cost $20k just for the hardware.
CentOS isn't stealing when it uses Red Hat Enterprise Linux (RHEL), however much I wish it would contribute back real value to Red Hat. But those companies that violate their contracts with Red Hat by using more RHEL than they pay for *are* stealing, and no one can hide behind the GPL to say it's not theft. It is, the second they sign a contract with Red Hat.
I have seen setups where folks use one sub, and the server it ties to becomes a YUM server for all the other RHEL installs they're using. While it may (or may not - no one has really tested this) violate the letter of the contract, it certainly violates the spirit, and IMHO invites bad karma.
And you're right - if you're going to take? Sure you're not obligated to give back, but it would be nice if you did (then again, CentOS IIRC doesn't get much more than donations...)
But, all that said, I don't see it as a rampant (or even looming) problem. No CIO who likes to keep his job is going to implement critical bits without some sort of backup plan for support. Sure, if it comes down to it, the infrastructure bits I mentioned up there can be re-imaged and back up in minutes at most. OTOH, if Oracle doesn't support it, then you're wasting the dough spent on that massive Oracle support contract in the first place, and your SLA gains a loophole that you don't want. Same with most other important ERP/CRM/(insert acronyms here) app suites.
Given that, there's no way that subs/services will be endangered to the point of being a hazard, IMHO.
Mostly, I think it may simply be a case that RedHat needs to come up with volume or site-licensing models for larger customers. I know with a lot of sites I've done work for, the biggest reason they run in a non-compliant mode is because licensing is SUCH a freaking bear. Many vendors' licensing systems are byzantine and ever-changing. Throw in that customers may buy some copies of software from one VAR and others from another and *some* directly from the vendor, and you have a nightmare situation for tracking license usage (and updates). On top of that, you often have internal procurement issues to work through - even when cost isn't an issue. It sucks and it REALLY encourages non-compliance.
You're not paying for the OS, genius - you're paying for support.
Amen brother (or sister)
Amen
Here's the main reason companies want paid OSes: they want someone to call and/or *sue* if something critical breaks in a major way.
Not at all, it is actually imposible to pirate open source software.
Anyway, I would like to know how much Alfresco pays the developers of all the open source
software they use to create their offerings. They do pay every single one of them, don't they?
You seem to be confused about open source business model altogether. In a nutshell, unlike conventional business model, open source business model does not normally perceive the open source software as a product, but a way to quickly capture the market. Then they try to make money by providing services around it. The most popular ones are: ads, corporate support, selling server equipped with related software etc.
I'd call it thinking-outside-the-box, rather than "the business gangsers want to control everything and make money from everything".
"Having the source code makes it trivially easy to pirate your software"
What a piece of bollocks. Open Source software is copyrighted, just like any other piece of software. The copyright owner can decide what to do with it. If the copyright owner decides to license his or her software under the GPL, that is is right.
Open Source has NO business model.
Some companies have a business model providing value-added services to Open Source software. And last I looked, that works fine for Redhat and Novell.
So, again, nobody is "stealing" Open Source software (well, maybe except MS, which has in the past used the network stack from BSD Unix, without the required acknowledgment; they since replaced it with their own.)
Next time, learn about this stuff before posting garbage.
That said, many larger organizations are starting to look at Ubuntu. They are not, however, just taking it for free. They are instead making donations to Canonical to support what they feel is important work. By doing that, they still get support, they still get regular releases, but they get more liberal control over how they distribute and install machines. They get more control over how much they spend. They could get Ubuntu for free $$$, but they donate to support having Ubuntu be free and open. Not out of the goodness of their corporate hearts but out of their own self interest.
On the flip side, other than the guarantees made by Microsoft, I'm not real clear on how the Novell/ Microsoft deal works and how it has allowed Novell to actually get folks to pay money. Maybe that's a topic for another post.
CentOS is not stealing RHEL. Neither is Oracle Enterprise Linux. I'm not talking about those distributions, as they remove trademarks/etc. and are using the underlying RHEL code, not RHEL.
But for those with a contract in place with Red Hat that use nonpaid RHEL, they are stealing. It's a clear violation of their contract, which is why IDC calls it out. Please read the IDC report and then we can discuss.
"IIt *is* stealing if you sign a contract with Red Hat that says you will buy support for all instances of RHEL that you run. Companies that use more RHEL than they pay for are violating their contracts and are stealing. Pure and simple."
And what exactly does that have to do with Open Source???
Redhat's support is not open source, so your sentence is no different if you would replace Redhat with Microsoft and RHEL with Windows.
Your article's implication that using Linux without paying for it is wrong, plain and simple.
If you wanted to write about contract violations, why in the world do you put Linux in the title???
If you don't need support and are not running critical stuff(=you can wait a couple of days for a security update)there is no point in buying support.
Also you are getting those updates for free with Ubuntu, if you don't need Red Hat/CenOS.
How is this cheating the system? I thought the costs associated with Linux are primarily administration and support. If they can do that on their own, why should they pay someone else to do it? If there's a licensing cost associated with Linux, I've yet to see it.
So what should Red Hat do to generate new revenue? That have to get it from advertising. That means making the Fedora site a place to promote desktop adoption. Help Linux users with browsers, music downloads, office apps, picture slide shows, etc., etc., etc. Get paid advertising and put it everywhere - but keep Linux and Linux apps free. This would be a hit with consumers and a great business. Red Hat cannot think they can just do the same old thing and survive in the modern business environment.
Unlike copyrighted music and videos, I doubt that Red Hat could get the FBI or any prosecutor to pay any attention to a complaint by Red Hat that someone had "stolen" their open source software and I doubt that they could prove any damages based on misappropriation of the software alone, or anything more than statutory damages (if that) for private misuse of their trademarks and copyright (artwork). Since they are able to stay in business, I have to believe Red Hat is quite capable of tracking how many servers, and of what type, they have agreed to support for each customer.
As CentOS says on their home page, "CentOS is an Enterprise-class Linux Distribution derived from sources freely provided to the public by a prominent North American Enterprise Linux vendor. CentOS conforms fully with the upstream vendors [sic] redistribution policy and aims to be 100% binary compatible. (CentOS mainly changes packages to remove upstream vendor branding and artwork.) CentOS is free."
really? you're REALLY asking that question?
This just in... people would rather not pay for something that is free. amazing reporting.
Anyway, for all you free free free folks, keep on not paying, watch the $100M/yr investment drop to $0, and then sit around wondering why you can't get device drivers, updates for new processors, why all your tech is getting further and further behind Windows and OS X ... Contribute or pay.
Dream on.
There are actually more device drivers for Linux, for the FREE OS, than for Windows.
How's that for disproving your assertions?
It is time that you enter the real world. Linux, FREE Linux, is here to stay. Better get used to it.
No, there aren't. There are more sound and video drivers included on-disc, but not universally. You can download the driver for practically ANY device for Windows. With Linux, you have to write your own. And that includes chipset drivers.
'How's that for disproving your assertions?'
>>>>What have you proven? All you've done is make an assertion of your own, using a few more caps to emphasize. I can "assert" that Linus Torvalds likes young boys, but that doesn't make it true, especially when I provide no EVIDENCE.
Also, while I do not know the exact details of how RHEL payment works your example of "cheating" or "stealing" from Red Hat seems very odd in light of unbreakable Linux. Anyone can use the RHEL code. There are trademark issues with redistributing it without taking out all the fingerprints of Red Hat, but open source means you are giving these things away. I have to say I have problems with your pointing your finger at companies that choose to make use of the liberal pay dynamics of the GPL. Red Hat knows what they're selling. They're selling service. While the concerns about customers growing out of the need for support is a viable one, it is hardly the crux and focus of your writing here. I think perhaps you should go back and steep yourself in Free Software. While I am hardly the hard line religious purist that Stallman is a basis in the ethical arguments that the FSF espouse reveal much of this argument is fundamentally founded in the world of proprietary monetization.
I don't know what the answer is...but I do know this - FREE is INEVITABLE with all content that can be distributed online. If you can digitize it and put it on the internet, then at some point down the road you will be able to get it for free. You can argue if that is right or wrong, but it just a reality - even legal or illegal. But it's inevitable. If you can't handle this not-so-pending fact as a business, then do something that can't be put online.
JM
They are actually making money. They are profitable. So, this whole thing is a non-issue
I don't know what Matt was smoking... It obviously distorts reality...
Difference? Ubuntu and OpenSuse are free $$$ and have an automated patch system. ReHat can be had for free, but you won't get automated patches with out a $ub$cription.
Not rocket science. BTW, what is rocket surgery????
Personally, though it takes a bit more effort, I prefer a BSD install for a server.
Are you smoking something this week?
How is downloading the free version "cheating the system"? No one owe Novell or Red Hat money for using its products. That is how it is set up.
Both OpenSUSE and Fedora are so easy to install and manage that paying for support is silly.
Yet in this article you call people who play by the rules "pirates" and "cheaters" even though in the words of Linus Torvalds they are "customers waiting to be converted".
It is like you have no ability to tie concepts together, your articles read like you forget what you wrote when you submit it.
You seriously need to stop writing and the CNET editors should just give you the boot.
- by ferricoxide August 19, 2009 10:31 AM PDT
- @article author ( Matt Asay)
- Like this Reply to this comment
-
Showing 1 of 2 pages (88 Comments)Wow. Just freaking "WOW". You didn't just really put to print the words "fact that they seem to be stealing RHEL"???
Sorry, but neither the use of Fedora (a free release of RHEL from RedHat that is used as a beta engine for RHEL in much the way that Sun started to use OpenSolaris for their paid Solaris offering) nor CentOS could be classified as "stealing". Classifying them as such is borderline libelous.
Further, this "stealing" you assert seems to be more problematic for RedHat than the OpenSuSE project seems to be for Novell. However, you fail to explore - or even mention - that nugget. Obviously, you're also failing to paint them with the same "stealing" brush you did with CentOS. So, the question becomes, do you have a financial stake in RedHat, or are you simply hopelessly uninformed??