Linux's Long-term Appeal

10 million users and growing

Hard to believe, but it's 10 years already since 21-year-old Linus Torvalds made public version 0.02 of the Linux kernel to a few eager usenet groupies. Today, there are an estimated 10 million users worldwide. IDC estimates that by 2004, Linux will be an accepted part of most markets' enterprise computing environments.

The marriage of free code and free enterprise hasn't been an easy one. Most pure Linux players are still privately funded, with only a few publicly traded in the United States. Those publicly traded companies have been heavily hit by the dotcom downturn. Red Hat, whose stock price rose well above $200 per share in late 1999, now trades for less than $8 a share. But stock values give only a small indication of Linux's long-term business potential.

The Myth of Free Code

Free code doesn't always mean low-cost implementation. According to Gartner Inc. analyst George Weiss, Linux cost savings depend on several factors, including:

  • Your organization's current skill levels, and the corresponding level of outside support you'll need.
  • The leverage possible by capitalizing on a fixed configuration and OS environment over many site deployments.
  • The application's complexity.
  • The size and cost of any migration from a legacy environment.
  • Software and licensing fees that can be saved by using open-source equivalents.
  • The scalability and suitability of the applications.

Meanwhile, META Group cautions that fees for Linux-based software and services are likely to increase, with current Linux software pricing generally too low to be sustainable. The firm predicts a gradual rise in fees to a level approximately 20 percent lower than Microsoft NT/Windows 2000 pricing.


Linux Compound Annual Growth
(in shipments)

Predicted, 1999 to 2004: +35%

Actual, 1999 to 2000: +24%


Linux Market Share Growth
(server business)

1999: 24%

2000: 27%


Annual System Hardware and Software Costs per 1,000 Users

Unix: $324

Linux: $17

Source: IDC

Moving Forward: Growth Trends
Although there is greater willingness to run Linux on front-end application servers, many large enterprises remain reluctant to embrace Linux broadly because of support concerns. IS directors and CIOs, explains Gartner analyst George Weiss, "tend to use their vendor support on Unix and mainframes as the reference comparison for that expected of Linux."

This leaves the support market poised for significant growth in the next several years. IDC estimates that the Linux support market revenue will grow from $12.5 million in 1999 to $28.3 million by 2004.

Two other growth areas for Linux are:

  • Software service providers, especially those offering integration expertise
  • Distribution vendors.

Overcoming Scalability Limitations
Although there have been significant advances in getting Linux to scale, most Linux systems still reach their optimal scalability with four-way symmetrical multiprocessors (SMPs). Weiss predicts that we'll see Linux scale to eight-way processors by the end of 2002, with increases to 12- and 16-way processors in 2004.

Popular Linux Distributions

Caldera OpenLinux
Publicly traded company reported $40.4 million in revenue for the year ended Oct. 31, 2001.

Debian GNU/Linux
The only non-profit Linux distribution; produced by more than 800 volunteer developers around the world.

Oct. 17, 2001, privately held Linuxcare appointed Avery Lyford as CEO and President, replacing company co-founder Arthur F. Tyde, III.

Mandrake Linux
Publicly traded on the European stock exchange, with an estimated 1.7 million users.

Red Hat Linux
For the last nine months ended on Nov. 30, 2001, the publicly held company reported revenues of $68.2 million, a decrease of 10% over the same period in year 2000. Just ported to IBM mainframe; see page 10.

SuSE Linux
Privately held company claims 15 million users worldwide.

Privately held company with $100 million in private funding.

Source: Zack's Investment Research

Support from IBM, Microsoft
IBM's decision in 1997 to begin offering Linux as an alternative to its own operating systems has given the OS an enterprise viability it would have taken years to build on its own. Linux is now an OS option for every server IBM sells. [See "Big Iron and Open Source Join Forces" and "Linux Appeal Grows Despite Obstacles" on pages 42 and 47.—Ed.] Microsoft, a longtime Linux foe, is helping Linux in a different way. Backlash from Microsoft's aggressive licensing fee changes in 2001 and Windows XP's new, highly restrictive licensing technology—coupled with tighter economic conditions—are driving many companies to evaluate Linux as a more cost-effective alternative.

IBM's support notwithstanding, META Group doesn't believe that Linux is suitable for widespread enterprise deployments today. However, with significant support from IBM, Hewlett-Packard, Compaq, Dell, Siemens and others, META predicts that robust, industrial-strength versions of the OS will be available in two to three years. META is urging IT organizations to begin acquiring in-house Linux expertise now as a potential long-term alternative to Unix and Windows knowledge, especially, as META's Dale Kutnick says, "to hedge against future Microsoft intrusions into your wallet."