The Year Ahead: Will Linux survive the dot-com crash?

2001 saw Linux suffer from its association with the dot-com boom, as the Internet economy suddenly found itself unpopular. But open source development will prevail, say observers
Written by Matthew Broersma, Contributor
The implosion of the dot-com economy has raised questions about the future of the GNU/Linux operating system and the open source movement that it typifies. But while the collapse of high-profile Linux ventures such as desktop software developer Eazel over the past year may have given the impression that open source would disappear with dot-com euphoria, Linux continues to gain ground, and could even be given a boost by the slowing economy. "Everyone has been saying that the Linux movement is over because the dot-com boom is over," said Jacques le Marois, president of French Linux distributor MandrakeSoft. "But Linux is going to go on. It predates the dot-com hype." Le Marois believes that Linux culture has a lot more going for it than did the Internet business boom, which always rested on precarious foundations. "Linux people are always, work, work, work. You're doing it because you're interested in it. With the dot-com people it was always about making a lot of money on stock options and then retiring." Nevertheless, much of what got Linux talked about was directly related to Internet hysteria, beginning in 1999, with the sky-high initial public stock offerings of Linux distributor Red Hat and server manufacturer VA Linux Systems -- now VA Software. As a result of those IPOs, anything with "Linux" in its name could soon find large amounts of funding, and scores of Linux companies sprang up out of the woodwork. In 2001 many of those companies, like Eazel, closed shop. Even more worryingly, many firms that had devoted themselves to open source development -- in which software is improved by the developer community, with no one company in exclusive control -- this year moved in a proprietary direction. Examples include Ars Digita, VA Linux, Caldera and Great Bridge. Despite Linux's penetration into the server market, a recent Goldman Sachs survey found that mainframes, Linux servers and supply-chain management ranked as the three lowest spending priorities for executives in Fortune 1000 companies. About 65 percent of executives polled by Goldman Sachs said they have no plans to use Linux at their company next year. A growing market for Linux servers
On the other hand, Linux is far from dead in the water, and is in fact giving Microsoft a run for its money in the Web server market, where it is the second most popular OS after Windows. Dan Kusnetzky, vice president of system software at IDC, says Linux's market share stands at about a third and will grow to 41 percent by 2005, while Microsoft's will grow more slowly to 46 percent. Why isn't this growth showing up on surveys like Goldman's? Linux companies point out that Linux doesn't show up as a spending priority for one very good reason -- it's free. Le Marois says when he visits large, conservative companies the executives are often unaware that the technical staff have downloaded and installed Linux to run critical applications. "It's stealth Linux. They say 'don't tell the chief financial officer,' they just want it because it's more reliable. All these people are pushing Linux up from the bottom," he said. While Linux originally rode the Internet hype to fame, it is now receiving publicity from two unexpected sources: Microsoft, with its unpopular new licensing regime, and the global economic slowdown, which makes inexpensive Linux software seem more attractive. A recent IDC study found that 60 percent of Microsoft customers don't really understand the impact of the new licensing plan, called Licensing 6.0, and 15 percent are concerned enough about it to look at alternative technologies. "Although 15 percent is not a huge component of Microsoft's customer base, it is never good to have unhappy customers," said Al Gillen, system software research manager for IDC. He said the slowing economy could also have "a positive influence". Establishing a foothold outside the US
Linux has shown some potential for establishing itself outside of the US, by appealing to the pocketbook or to national interests. "The majority of paid shipments of Linux are in North America. It is clear, however, that countries in Europe and parts of Asia are very interested in having system software which is not tied to any specific country or company," said IDC's Kusnetzky. Developers outside North America are showing ever-more interest in Linux projects, according to a November study by Evans Data Corporation, which covered 70 countries. Of the international developer community, 48.1 percent expected to be involved in a Linux development project in 2002, up from less than 33 percent this year. In North America 39.6 percent of developers expected to work on Linux applications. In some Asian countries, including China, it is now possible to buy Linux pre-installed on a retail PC, although dealers concede that the OS is usually replaced by a pirated copy of Windows. IDC analyst Gillen says the international market is particularly interested in desktop software, although "pirated Microsoft licences, which won't be stopped with the product activation technology in Windows XP, also is a competitive and 'free' alternative." Desktop remains elusive
Breaking into the mainstream desktop market will remain a major hurdle for Linux this year, despite user-friendly new releases from MandrakeSoft, SuSE and Red Hat. "Linux on the desktop continues to be the market that could be, only if...," said Gillen. "In 2000, Linux accounted for about 2 percent of client new licence revenue shipments versus Microsoft's 92 percent. This is a longer term transition, and may take place as a different form factor device rather than a replacement PC." Even optimists like le Marois concede that Linux will take a while to filter down to the mass market, making its way first through the early adopter community before it becomes viable as a retail desktop OS. "You can get people to change their habits, but it's not going to happen in the next week or the next month," le Marois said. Key to luring new users will be great applications, many of which already exist. But others that are considered a basic part of a Windows package -- like Microsoft Word -- are still lacking. "Applications are the key to success on the desktop, and many of the most popular applications are available on any operating system you'd want - as long as it's Windows," said Kusnetzky. The threat of software patents
Another danger looming on the horizon for Linux -- in Europe, at least -- is the potential introduction of software patents. Europe is moving to push its patent laws into line with those of the US, which allow companies to patent not only physical hardware, but also software processes. While some European companies argue that patents are necessary here to allow European companies to compete with the US, many software developers believe they could stifle competition by making it easier for big, patent-owning companies to sue start-ups. In Europe software is currently protected by copyright, which prevents programmers from copying actual software code, but gives them more freedom in the processes that their software carries out. Patents would allow companies to sue if a competitor's software was functionally similar to theirs, regardless of the underlying code. The danger is particularly great for open-source developers, who are obliged to make their source code freely available. "With Linux you can look at the source code, so there's more of a chance to get in trouble," said le Marois. For all your GNU/Linux and open source news, from the latest kernel releases to the newest distributions, see ZDNet UK's Linux Lounge. See the Software News Section for the latest headlines on everything from peer to peer clients to Office software and beyond. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the Linux lounge forum Let the editors know what you think in the Mailroom. And read other letters.
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