IDC: Linux spending dips, but is poised for growth

Revenue from new licenses of the Linux operating system declined last year, after a two-year growth spurt. However, a shift in the business model around the open-source operating system is setting Linux up for a boost in revenue through 2006, a recent survey shows.

Sales of new Linux operating system licenses declined 5 percent from 2000 to 2001, according to a survey released last week by research company IDC. Over the next five years, revenue from the sale of Linux systems is expected to grow from US$80 million in 2001 to $280 million in 2006.

The decline in Linux revenue from new license shipments was part of a wider decline in server software during 2001, according to IDC. Additionally, the number of units of server operating systems shipped in 2001 was flat compared to the year earlier, according to IDC.

Microsoft Corp.'s Windows operating system was the only system to show revenue growth from 2000 to 2001, said Al Gillen, research director of system software at IDC.

IDC tracks its data for new license revenue by adding up all of the copies of an operating system sold as part of a configured system or in a box.

This tracking method has not always been a good indicator of how widely Linux is deployed because the operating system can be download freely from the Web. Additionally, users can install a single copy of Linux on any number of computers, which is not possible for Windows users due to licensing restrictions. As a result, revenue collected from the sale of Linux licenses doesn't correlate directly with how widely it is distributed, according to Gillen.

"Historically, it's been harder to track. But that's changing," he said.

IDC research shows that customers are changing their habits for how they deploy Linux in the enterprise. It is becoming more the case that a Linux user will install a single copy of Linux on no more than two or three machines, Gillen said.

"It's our belief that over time the industry is going to move to a smaller number of deployments (per copy)," he said.

This shift is in part due to new business models being constructed around the open-source operating system by vendors such as Red Hat Inc., SuSE Linux AG and IBM Corp., a major supporter of Linux.

"The vendors are moving to a model where they're offering support for only one machine per license," Gillen said.

Under that model, customers must purchase a license for every server that they want supported by the vendor. Red Hat, which, according to IDC, holds the lion's share of the Linux server software market, follows that licensing model.

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