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Sep. 27, 2009

Large software companies such as Microsoft and Oracle still depend heavily on their proprietary software for most of their profits. While these big software giants are seeing some of their growth decline, open-source companies like Red Hat are actually gaining new customers and profits-- and even in a sluggish economy.

In Red Hat's latest quarter, the company reported higher than expected revenue and profits. "Profits minus one-time expenses and including a 4-cent per share tax benefit hit $39.4 million, or 20 cents per share, up more than 30 percent from 2008."

A little over two years ago, IDC analyst Al Gillen forecast that the Linux ecosystem would be worth about $40 billion by next year. In 2008, IDC forecast the Linux ecosystem to be worth $49 billion by 2011.

And for its part, even Novell recently reported a more typical quarter for an open source company. Novell saw its Linux revenue go up 22 percent from the same 2008 corresponding quarter.

While all of this is happening, Microsoft's revenue declined 17 percent for the same period and its net income dropped almost 30 percent year over year in the company's fiscal 2009 fourth quarter due to continued weakness in global sales of computers and servers.

Comparing this to Oracle, according to a recent IDC report, "Sun Microsystem's second quarter server revenue declined 37 percent to $981 million, the largest percentage drop of any major server vendor."

While Red Hat continues to enjoy the largest market share in the Linux vendor community, Novell had a particularly good 2008 growing Linux operating system revenue by a little over 50 percent from 2007 to 2008, while at the same time growing overall market share over 5 points to almost 30 percent last year.

There is an undeniable difference in the various studies in how IDC is measuring the Linux market as it pertains to the vendor community. In some cases it's the total value of all those in the Linux ecosystem including hardware and software support services, while the new forecast is just operating system revenue.

It's also important to look at Linux operating system revenues. But some think it's a lot more important to look at the total value of the Linux ecosystem.

No matter what happens, there's no question anymore that open source and Linux are here to stay, as both continue to build on its own momentum.

In good times as in bad, most IT industry observers agree that the momentum will not only continue but will in fact accelerate to new levels.

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Source: Linux News.

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