What's Open Source worth on the market?

If we want to talk about real success on the market and Linux in the same sentence, than we have to talk about the server market. However, in the past few years its expansion has stopped (which seemed to be irresistible until 2004-05, with sometimes 40-50% growth annually). It is said that the main reason for the recent bad results was that Linux's already obtained great part of the market against Unices, but nobody wants to switch from Windows Server to Linux Server. Today the estimated share of Linux is about 20% of the sales, and Windows' is about 60-70% on the server side.

On the desktop systems' market Linux is growing exponentially (see the graph below - nubers on the left are percentages of market share)...

... but it's market share is still not too significant, it's still below 1% (according to HitsLink). That's why I didn't draw Windows (about 90%) and Mac (7-8%) on this graph.

In the field of Webservers, the open source Apache is market maker (with 50%). In 2006-07, just like Linux servers, it lost big part of the market against Microsoft, but in 2008 the power relations seem to get stabilized.

On the other hand, on the browser market the different research institutions talk about very different numbers. I'm goint to use the data of HitsLink, because they're the best for trend analysis (detailed enough and available since 2004).

The growth of Firefox is slow, but unstoppable, it's going to overtake IE6, which is part of the most popular OS, Win XP.

Weekly News #2

• Ubuntu 8.10 is out!
• Linux is running on some machines used in Barack Obama's campaign? Some people said so on a blog here... Wether it's fake news or not, it's good ad for Obama and Linux too.
• The 3.0 version of OpenOffice.org seems to be a success: more than 3 million people downloaded it during one week. 80% of the downloads were Windows versions.
• Canonical Ltd, the producer of today's most popular Linux distro, Ubuntu is still negative in profitability. Company leader Mark Shuttleworth told that the revenues were growing well, and the company is expected to be in positive in 3 to 5 years.
• Linux is teached in Russia's schools. The PSPO program has been introduced in more than 1700 educational institutions. The program was started in order to crack down on software piracy, and substitute illegal software with free solutions. I think, it's a good way: if they teach people in the school how to use Linux, the cost of the switching will be lower for companies.



• A graphical contest for a special series of dutch 5-euro coins was won by a work made using only Open Source software. Here's the example how to make money with Open Source! :)
  

Open Source Marketing, The Basics

It's interesting to talk about the marketing of a thing which covers a free, and freely variable product. But, in any case, we are talking about a viable method, because many advertisers from the old line find it a real threat.

So let's see, what are the main differences:

- Marketing channels: we can forget the traditional channels. There are so few paid advertisements in newspapers, which are promoting free or open source software. They're expensive and don't provide enough interactivity.
- Incomes come from different sources. At traditional products, the main source of income is the price of the product itself, and the complementary products are usually free, or make a smaller part of the company incomes (e.g. "Would You like an A/C into your car?"). In the Open Source Marketing model (OSM) the product itself is for free, and the sources of the main incomes are the complementary products/services (You get the manual how to build your car, but if you want somebody to make it instead of You, you'll probably have to pay for it). (Note: nowadays many old-line products have their main incomes from complementary products, e.g. blades are more expensive than complete razors)

- Because of these things above, an open source product needs much bigger spread to be profitable than a traditional one (popularity is needed for selling accesories, and for advertisers also). That's the answer why Canonical isn't yet profitable despite the fact that their open source operating system (Ubuntu) is running on millions of PC's.

- The role of Word-of-Mouth (WoM) is increased. The engine of OSM is the community, who are often keen on the product, that's why they recommend it to their friends with enthusiasm. And their friends are willing to try it, because it's totally free, they won't feel that somebody wants their money in the background, like in many MLM systems.

- Moreover, the traditional provider-client relationship is often irrelevant in the OSM, because each user can easily become part of the development team (well, this is usually not true for the complementary services...)

I could write pages about this topic (and I will, but not now, and not in one post :)), that's one of the main topics of this blog. Recommended article: http://www.collaboratemarketing.com/open_source_marketing/

Crisis: an opportunity for Open Source?

In the past 100 years the Developed World had to face two big crises: first was the Great Depression in 1929-30, and the second was the Oil Crisis in the 1970's. A big crisis seem to happen about each 40 years, so the things happening now were historically probable.

Big crises always brought the collapse of an old Economic System, and helped the rise of a new one. For example, the years of 1930's and 40's brought the mass spread of electricity and oil (and less demand for horses), on which was the western society so dependent in the 70's, that the radical growth in the prices of energy sources caused the next crisis. The great achievments of the 70's and 80's were energy-saving machines and miniaturisation. In fact, it happened in the 80's that computing became available for the masses.

The dot-com bubble in the begginning of the 2000's could be a warning: something is in change. The structure of the economy has also changed slowly in the background, the small and medium enterprises have bigger and bigger roles. Serious changes happened in the IT sector as well: computers became devices for connection with other people rather than devices for computing. Of course, its former functions are also in use, but nowadays a PC without internet isn't worth too much.

My opinion is that a clever businessman shouldn't lament much over the situation, and try to conservate the old rules. He should instead, plan for the era after the crisis. Because the end of a thing usually means the beginning of a new thing. It's noticeable that most of the things that are determinative factors after a crisis are present also before it, but they weren't able to expand widely in the circumstances of the old system. There had to be chaos again for their success (the mammals were the superior beings, but they couldn't rule the world while the dinosaurs existed).

How will the New Economy look like? I could only guess. But if it's true that IT was the leading sector of economy in the past 20-30 years, then - because history can repeat only itself - the main changes should happen in this field. Maybe it will bring us the mass spread of Open Source.

Weekly News #1

• Google made its mobile system, Andriod open source. In addition to the things I wrote it in my previous article, this is another proof that the Internet Giant takes it serious to support the Open Source World. Google expects faster development from the opening.
• Dell has started to advertise its mini netbook, which has Ubuntu installed on it (as an other option, You can choose Vista, but I wonder what speed can it achieve on such a mini machine). It's interesting, that with normal-size laptops and desktop computers big manufacturers very rarely offer Linux, but on the market of mini netbooks (which is growing rapidly) Ubuntu is very popular. Maybe this sector will bring Ubuntu to success?

• I read an article on ServerWatch about the next victims of Linux. The author said, they would be the proprietary UNIX systems. The main advantages of Linux are based on the lower costs (according to an example, about 90% can be saved), the bigger user experience (more people use Linux than UNIX), and the level of development that have Linux achieved in the recent years.
• Linux Foundation made a study, which asserts that the Linux ecosystem is worth $25 billion. Is it a high or low amount? Well, I'm interested in Your opinion... According to another statement of the Foundation, it would cost $10,8 billion to develop Fedora 9 from zero, from which the Kernel itself would cost $1,4 billion. Many a little makes a mickle, the guys from all over the World have coded programs of nice value in their spare time.
  

Google Chrome for Linux?!

According to Amanda Walker, a software engineer at Google, versions for Mac and Linux will be available, too - can be read in the 17th issue of Full Circle Magazine. What importance does it have for Linux?

Google's products are mainly web applications, which means that they're platform-independent. Their browser - just like Google Earth (which also has a version for Linux) - is a "traditional" program, and the general problem with these programs is that in many cases they're unlikely to have ports for more platforms.

This attitude of Google is important for Linux, because Google is among the most important copanies in the online world, and has great influence on the market. And it's not only about Chrome and Google Earth: it is about the company's willingness to develop for alternative systems.

Of course, it's Google's interest too to be present on many platforms: they simply can't afford to be dependent on their biggest competitor, Microsoft, by develping only for Windows.

The Open Source Business

Immense changes are going on in the software market nowadays. These changes are so big, that they've started to apply in other fields of life, too. For instance there is an Open Source (OS) cartoon out on the web (Elephant's dream), there are dozens of OS books, and thousands of essays with no/limited copyright.

Snapshot from Elephant's Dream

A proof for the importance of the Open Source phenomenon is is that Thomas L. Friedman, in his bestseller, named The World is Flat, claimed that one of the 10 most important forces which have flattened (practically reformed) the World in the beginning of the 21^st century is the Open Source community.

No doubt, in the past 5-10 years, one of the most significant changes in people's life was caused by the broad spread of the internet. The Open Source world played important role in that part: e.g. the Firefox browser achieved 1/3 share in its market (in spite of the fact that it can't communicate very well with Microsoft's business programs). Or, other popular example is the Creative Commons, as a special kind of copyright. Also, there are millions of sites on the web powered by Apache web servers and MySQL database servers.

And last, but not least, there is an operating system, which is developing rapidly: the Linux. Although it hasn't got significant market share yet, it bites off bigger and bigger mouthfuls from the Windows-dominated operating systems' market pie. I hope that the Linux developers have started to understand in the recent few years that technological superiority is not the only property of a software, which can lead it to success on the market. It depends much more on that how they can „sell” it (for example, Windows Vista is worse than XP in many fields of usability, but MS has sold millions of it). Well, MS has a marketing-machine with lots of experience and knowledge, which is too big monster for a group of geeks to cope with.

But, I think, they don't even have to cope with it. Their job is to make the best software for the users. So, the main purpose of this blog is to reveal the opportunities in the business side of the Open Source World and to find out, what kind of marketing methods can be used in the popularization of Open Source Software. Furthermore, I'll be intent on posting news about the most important events, which affect the Open Source World – in the market.

I hope You'll find this blog useful!