Linux Looms Larger Than Thought

In terms of new PC shipments, Linux and Apple's operating system are in a dead heat, according to Al Gillen, IDC's research director, system software. But in terms of the installed base of computers, Apple --which has been around longer than Linux -- has a larger market share, Gillen said.

IDC estimated that the nearly 6 million shipments and redeployments of Linux PCs in 2004 will grow 30% annually to 17 million units in 2008, reaching $10 billion in total annual sales. The bulk of those shipments and redeployments are expected in the regions of Europe, the Middle East, Africa and Asia-Pacific.

Linux is not being as widely used as a free desktop operating system as popularly perceived, Gillen added. For every free version of Linux on the desktop in use, there are about three paid versions of Linux in use, he said.

Cohen took an even more optimistic view of Linux as a client operating system, saying he believes that Linux can grow to represent as much as 20% of the worldwide desktop market within the next five years. Microsoft, however, isn't just sitting still watching Linux take share. The world's largest software maker recently started offering a stripped-down, cheaper version of its operating system called Windows XP Starter Edition in developing countries, including Russia, India and Malaysia.

And Microsoft executives have hinted that the company could use its hefty patent portfolio to take on Linux. Dan Ravicher, founder and executive director of the Public Patent Foundation and senior counsel to the Free Software Foundation, found that Microsoft holds 27 patents that have not yet been court-validated but could be used to support patent claims against Linux. (His review of potential Linux patent infringement was done for Open Source Risk Management, a firm that sells patent insurance.)

But Cohen downplayed the legal threat by Microsoft. He noted that Microsoft's going to court over Linux could ultimately alienate the company's customers who typically use both Linux and Microsoft platforms.

"You can't shut down your own customers from running applications and at the same time ask for new orders to grow your business," Cohen said. "Quite frankly, we don't see patents being the big issue."

One area that has caused a chicken-and-the-egg problem for Linux is the applications market. Companies have held off using Linux because there haven't been enough applications written to run on the operating system; applications developers have held off writing applications on Linux because there aren't enough Linux users.

But IDC found that packaged software has become the fastest-growing segment in the broader Linux marketplace studied for OSDL. Calling packaged software a key opportunity for Linux, IDC projected that packaged software for Linux would expand 44% annually to more than $14 billion in 2008. The market includes database, application-server software, applications and management tools.

While that growth is certainly impressive, IDC calculated that the packaged software market on Linux still will comprise a small part -- just less than 6% -- of the overall packaged software market on all operating systems, estimated to reach $250 billion by 2008.