The Linux Beacon--The Linux Ecosystem to More than Double to $49 Billion

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Volume 5, Number 18 -- May 6, 2008

The Linux Ecosystem to More than Double to $49 Billion

Published: May 6, 2008

by Timothy Prickett Morgan

Linux may be a free platform for many and a reasonably inexpensive alternative to Unix and proprietary platforms for others, but make no mistake. For years, Linux has been big business, and if projections made by the market researchers at IDC turn out to be correct, in a few short years the Linux server ecosystem spending on hardware, software, and services directly relating to the platform will hit $49 billion by 2011. That's more than twice the $21 billion in Linux-related server spending that IDC reckons the companies of the world accounted for in 2007.

The Linux ecosystem study was sponsored by the Linux Foundation, the non-profit consortium of hardware and software vendors and other indy Linux luminaries that was the result of the merger of Open Source Development Labs and the Free Standards Group back in early 2007. The Linux Foundation, being open, is distributing the resulting report that it commissioned, called The Role of Linux Servers and Commercial Workloads, for free, and you can read it here for yourself, if you are so inclined.

I will give you some of the high points, and throw in a few points of my own. The key point in the report, aside from financial figures and pretty charts that display them, is that Linux continues to expand beyond the Web infrastructure workloads that typified its first decade of commercial use and continues to make headway into the data centers and data closets of the world, where Unix, Windows, and proprietary platforms have ruled. Linux is making headway into database and application serving, roles where it has been available for many years. But companies are loathe to change their backend systems and often wait until they have a compelling economic reason to change their systems to also change their underlying platforms. In the early years, Linux was part of the buildout of Internet-style networks, and this was a greenfield installation for all but the most sophisticated telecommunications, service provider, and university organizations, where Unix was the name of the game for a long time.

IDC says that Linux-based application software is nonetheless taking off. In 2007, Linux platforms accounted for about $10 billion in application software spending, a mere 4 percent of the $242 billion in licensing of application software. But by 2011, IDC believes that Linux platforms will have a 9 percent share of an application software market that will grow to $330 billion, or about $31 billion in sales. Over that four year span, Linux app sales will more than triple while the market will only expand by 36.4 percent. The Linux application space is therefore growing at nearly six times the rate of the expansion of the application software market itself. This is akin to the early years of Linux server sales back in the X86 server days during the dot-com boom and in the wake of the dot-com bust, when everyone was looking to do things in a less expensive manner inside the data center.

In a sense, the dot-com bust is still going on, and companies are still trying to wean off Unix and proprietary systems when they can. "The growth of Linux as a platform for business-oriented workloads appears to be coming largely from migration of existing Unix deployments in combination with organic growth of Linux deployments in these same workload areas," the authors of the IDC report--Al Gillen, Elaina Stergiades, and Brett Waldman--say in explaining the growth of Linux beyond the infrastructure area.

Of course, Microsoft has spent a decade attacking Unix platforms with its ever-improving (well, sort of) Windows platforms. The Windows target that Linux vendors and application vendors have to shoot for its quite large, with Windows server platforms (plus Windows XP and Windows Vista client apps) driving $127 billion in sales in 2007, more than half of all application software spending. By 2011, IDC is projecting that Windows application sales will account for an even larger slice of the application pie--58 percent compared to 53 percent in 2007, to be precise--and that works out to $190 billion in Windows-related app software sales.

One of the wild cards in these numbers is, of course, what happens to the Solaris Unix variant from Sun Microsystems. While Sun has distributed more than 12 million licenses of Solaris 10 since launching it three years ago, it is hard to say how many are being used in production. Sun doesn't seem to have been hurt by the open sourcing--Solaris is still driving more than $1 billion in software and services sales, as best I can figure, about the same level it did as a closed source platform with fee-based licensing and tech support. Solaris shops could--and probably will--give a lot more thought to a jump to Linux now.

The other wild card is the economy. Phase changes for server platforms are sometimes driven by a new technology--such as the family of Internet protocols on Ethernet that replaced a collection of proprietary networking software stacks and peripherals to support them--but are often driven by economic downturns. The proprietary midrange shift in the 1980s was during a recession, as was the move to Unix platforms in the early 1990s. Linux got a lot of attention in the late 1990s, during the dot-com boom, but it got a lot more traction in the post-boom time of 2000 through 2004. The platform that offers the best and most scalable server virtualization for the lowest price is going to eat a lot of share if a recession happens.

One last thought. None of this includes the cost of people to manage server platforms, and the architectural design of Unix and Linux platforms gives it an edge in the data center that is equal to the massive application portfolio and vast installed base that Windows enjoys. When people are expensive and need to be removed from the equation, it is safe to bet that Linux can provide a competitive edge to Windows in terms of the ease of support. Not because of the systems that Novell and Red Hat have built to compete with Windows Update, but simply because their architecture requires fewer patches to begin with.