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Linux versus the world: The unwinnable war?

by Simon Brew

The first three months of the year were defined, in the technology sector, by some very scary numbers. Just feast your eyes on some of these. Apple, we learned, pulled in profits in just three months of over $3bn. That’s not in a year – that’s just in a quarter…

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The first three months of the year were defined, in the technology sector, by some very scary numbers. Just feast your eyes on some of these. Apple, we learned,  pulled in profits in just three months of over $3bn. That’s not in a year – that’s just in a quarter. That number doesn’t account for sales of the iPad either, its latest bizarre contraption, for which the numbers are due to hit in the next round of figures.

Microsoft is happy to play the numbers game, too. It’s been buoyed by the fact that Windows 7 is the most successful iteration of its operating system to date, and that its numbers are trouncing those of Windows Vista. As such, how much has Microsoft – a company that was pruning its staff numbers on more than one occasion last year – brought in in profit for the first three months of the year? Ah, that’ll be a cool $4bn. Four. Billion. Dollars. You could cut VAT with that. By anyone’s measure, they’re scary, scary figures. It gets more staggering if you look at straight revenue before profit. Here, Apple snared $15.68bn. Microsoft’s revenue was $14.5bn.

What also becomes clear from these numbers is that Apple and Microsoft support an ecosystem of firms that rely on them for much of their income. Take the profits being reported at chip-maker ARM, which makes technology for Apple products. Look at the knock-on software purchases that tend to go with a copy of Microsoft Windows. Bluntly, when Apple and Microsoft are bringing in the loot – over $10bn a month between them – there are financial ramifications right down the chain.

It’s little surprise then that there’s not much incentive for retailers and e-tailers to challenge the status quo. We saw this most clearly with the first wave of netbook computers, which infamously arrived with Linux, rather than Windows, installed upon them. And while there’s a degree of smoke and mirrors about the scare stories that followed – higher return rates on machines with Linux installed, for instance – the bottom line became that retail couldn’t wait for Microsoft to sort out its operating system for netbook suitability.

After all, look again at the ecosystem. As has been pointed out by better people than me, a sales rep in PC World will be acutely aware that if they sell a machine with Linux on it, then that’s the last software sale said store is likely to make to that customer. Notwithstanding the fact that open source software is freely and widely available, there’s the fact that you simply wouldn’t need to go back to buy a copy of McAfee Anti-Virus or something of that ilk. You just wouldn’t need to buy software solutions for problems that simply don’t exist in the Linux world.

As such, from a short-term business perspective – and retailers would argue that it’s a long term one as well – there’s little point pushing open source in any kind of environment where one eye is always going to be on what they can sell a person next.

And thus you come back to the kind of retail ecosystem that’s now got to such an advanced stage that two individual companies are controlling massive, massive amounts of business. Bringing in the kind of profits that could chop a solid percentage off the national debt of this fair nation in just a year.
In spite of being a passionate believer in open source, I can’t help feeling that that kind of big battle, fighting the control that Apple and Microsoft exert on their respective markets, is not a winnable one. That’s not an ideal scenario, and that doesn’t mean that open source can’t make and isn’t making major inroads. But it’s one of those instances where a bit of expectation management won’t do much harm…

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    • Morgan

      Today most major tech companies (in the mobile sector mainly) are working with Linux, particularly hardware manufacturers

      HP, Dell, acer , LG, Intel, google, Motorola, NEC, Panasonic, and Samsung, Vodafone, Nokia, HTC (the list goes on for quite a while) are all working on some form of Linux system or device, even Sony is (although they obviously hate Linux – and everything)

      So for me it increasingly looks like Apple/Microsoft will be the odd one’s out.

    • Mikael Widersten

      Spot on.


    • rich

      This excessive profit margin, I call it “fat”. So much fat, so many inefficiencies in the system that it’s due for a diet, a streamlining. The coming years will bring lifestyle corrections to the market that will make these discretionary expenses obsolete.

    • Fred

      You are correct.

      The only thing that will change this, is when people get tired of spending there hard earned money on the software treadmill that is called Microsoft. Apple is not as much of a software treadmill.

      Another thing that will help change the ecosystem is that people are now getting used to Linux in the form of smart phones.

      Lastly, as more software is able to be run from a browser the OS will be needed less to run legacy software and games, which should be the final nail in the Microsoft coffin.

    • Jose_X

      The iXXX shows people want what they perceive to be of high value and utility. Linux didn’t play a role here because “Linux” is not a company that produces hardware; however, Google and others are supporting Linux on many types of nonPC devices and these are having an impact on the market.

      Microsoft’s money is not surprising for their monopoly network and with so many having taken a pass on Vista and with Microsoft pushing Windows 7 upgrades by dropping support for XP.

      Retailers have many ways to add value to Linux to make a bundle, but they will have to think and retool some. Linux offers more opportunities for exclusive value-add than does Windows. Some retailers are already having success with Linux, but this takes time, especially with so much invested in Microsoft. All it will take is one large retailer to make significant money with Linux and others will be pressured to cut the expensive Microsoft middle person out of the equation. The more money that goes to Microsoft’s monopoly, the fewer remains to make additional purchases (eg, hardware, services, and branded Linux derived solutions).

    • Patrick EB

      Your point about retail sales involving software is a valid and pertinent one that is not so often discussed.

      Unless software and hardware sales are separated, people will often stick with what they’ve bought and with which they’re familiar.

      I’m not clear on how GNU/Linux and FOSS in general will overcome this situation in the near future – or the distant future – and it’s something about which I occasionally despair.

      Recently I installed Thunderbird for a friend. She found it ‘less intuitive’ – read ‘I’m not familiar with it’. It does everything she needs to be done (IMAP with her gmail address, calendar etc) but she’s not familiar with it and doesn’t wish to get to know it. So another friend is going to get a pirated version of Outlook 2007 for her. It’s on these occasions that I wished MS’s anti-piracy capabilities were superhuman :)

    • Homer

      That really doesn’t make any difference. If Linux is monetised in a similar fashion the same market stimulation can happen. Just look at Android for an example. Being Open Source does not mean that it shouldn’t or cannot be profitable. Quite the opposite. It’s available to be commercialised. Ubuntu will do it one day. Red Hat/Novell already do in the server space. All that is needed is a store front sales system, with supporting markets, and a library of commercial applications that run on Linux.

      If Adobe and others made their software suites available for Linux then there would be millions of sales. If the OS was charged for in the price of a new PC the way Windows is it would be no different. OK. You can’t sell virus scanners, but commercial software, why not?

    • ocratato

      Congratulations on a good analysis of why Linux is unlikely to break into the retail market in areas where Microsoft is well established.
      In other areas, such as ARM based machines, or where Microsoft products are too expensive, Linux might still have a chance to break in.
      The other route is to get into the business market first. Once Linux is familiar to the average user there will be a demand that the retailers will then need to meet.

    • FreeBooteR

      GNU/Linux has already won as far as i am concerned. For those of us that have been freed from proprietary abuse, we have won. Those who choose to pay the cost of their own slavery, all i can say is i feel sorry for you, hope your happy with your shiny new bondage.

    • Ferniez

      Linux has a real contribution to make. Slowly the idea of open source is taking hold. The idea of opening up things has stuck even if Apple and MS are still not there. Android IS making inroads and perhaps this is where Linux will really make a difference. Moreover, Jobs himself has observed that the desktop is becoming less important.

      Perhaps the role that Linux will play is to keep the two giants on their toes and pressure them to pay more attention to their customers. As Linux becomes more user friendly it will attract more attention. It is always lurking in the background as a real option for users should they become more dissatisfied. We have a ways to go but one thing is for sure Linux and open source is here to stay. It will keep the pressure on and help the entire technology sector get better.

    • Retail sales are not relevant to the future of Linux. Neither are sales to home users. In fact, sales are irrelevant altogether.

      What is relevant is the use by big corporations. Because only when big corporations finally get the notion that making Microsoft (I exclude Apple here because it’s future is in consumer electronics, not PCs at all) the richest software company in the world (besides Apple!) is not the most effective use of their capital will Linux come into its own.

      The two major OS manufacturers in the UNIX World – HP and IBM – need to dump their proprietary OS’s and port the enterprise class features of those OS’s into Linux. Then they would have ONE major OS to go toe-to-toe with Microsoft in the server market. They could then begin convincing corporations that having UNIX/OSS technology in the server center would be enhanced by having a standards-based client OS on the desktop. This would lead to the wholesale conversion of desktops, which in turn would put pressure on the corporations’ hardware distributors, such as Dell, to support Linux, which in turn would put pressure on peripheral manufacturers to support Linux, eliminating the driver problem. The trickle-down from corporate conversion would inevitably lead to more home users because the use on corporate desktops would spur the development of more ease-of-use features in Linux which would make Linux more attractive to less experienced users. It would also spur more software development by mainstream software companies such as Adobe.

      This has been what was needed since the early 2000’s. It is the myopia of HP and IBM which has led to the fragmented UNIX market – NOT the supposed fragmented Linux distro market – which has prevented Linux from dominating the OS wars.

      Linux and OSS do have the potential of overturning the proprietary OS market. But until the two major UNIX OS makers wake up – or the Linux/OSS community can completely match the enterprise class capabilities – including system management – of HP/UX and AIX, Linux will be considered the “poor man’s second choice” in the general corporation.

      And corporate management does not like to be considered as “poor”. They would rather spend money than be perceived as being forced to buy something “cheap” just because it is cheap. This is why you see all these studies about how “cost is not the big factor” in choosing Linux over Windows – even though ultimately it is the big factor. The fact is that corporate management does not believe that Linux/OSS can match proprietary software capability, availability, and value.

      To some degree, they’re right. Take nonlinear video editing as an example. There is NOTHING in the OSS market that can match the Adobe Premiere CS5 product. Nothing. I have a client who knows Linux is more reliable than Windows and he would switch in a heartbeat – IF he could do the NVE his company needs to do. But he can’t because the tools just don’t exist in Linux. All the OSS NVE products are just not up to par.

      This would change of course if one or several companies took one or two of the OSS NVE projects and pumped development money and video expertise into them. This is the way the OSS model is supposed to work – companies use OSS to solve their problems, making the resultant products open source and available to everyone. Until this model actually makes inroads on most industries such that high quality OSS software products are available to handle the specific needs of specific industries, OSS and Linux will be second to the proprietary model for corporations – and thus second for everyone else.

    • Dann

      Unfortunately GNU Linux does not play the profit game like Microsoft and Apple do.
      They are competing in different areas.
      The problem with using profit as a margin for excellence, is that not only is Microsoft plagued with malware and viruses exponentially more than both *nix or *bsd based OS’s, but Apple has been first to get hacked in pwn2own competitions.
      So really, where’s the distinction between quality code and not?

      If it was program versus program, we would see a lot more favouritism for good ol’ Linux. We’d also see how heavily Apple has borrowed from them, such as Webkit which was borrowed from KHTML.

      More code is produced for a *nix system than an Apple or Windows system every day. I’d say millions more, and though that’s just a guess, that’s where Linux plays it best. (Including patches, bug-fixes, feature parity, etc)

    • Pietro Pesci Feltri

      Nice article. I agree with all you said, and must to add for FOSS there is other problem in order to be adopted. When people know how to do things with one kind of proprietary solution, often reject to learn other ways to do it, even if FOSS is involved.

      But FOSS does not need to “dominate” the world, only need to find profitable business models, and that is happening from some time ago. There are some undeniable advantages in Open Source as allow more control to users as example, and that advantages has a consumer market. Personally, I don’t see FOSS is in a war with proprietary software because doesn’t need to, only need be better and better. Its a waste of time to counter attack FUD campaigns from Apple and Microsoft, the way must be to offer a competitive solutions, and of course FOSS is doing that. It is the reason is catching fire from those companies. Anyway, competition is good for consumers and FOSS is a serious contender.

      I admire FOSS, but I use it because its a better solution for me. Simple as that. And in the end think it will take a really huge piece of the software pie, because its development model offer Quality, Standardization, Cross Platform, Scalability, Cost Effective Solution and so on.

      What you implied is not if FOSS will grow very much more with time, is the time will take that process, and I agree, that time will be long.

      Pietro Pesci Feltri

    • Matsen

      I agree with Pietro. I use FOSS coz its a much better solution for me. Besides i mostly use pc browsing, sending e-mail, editing and managering photos, some phote editing, other multimedia. So – there ain’t a single Windows-only applications necessary for me. And the truth is that 90% of people are in same situation. Thats’ why i think those people are just fools when using Windows and IE-browser just to face those malware things. Windows or Mac is perhaps must for only that 10% minority (home users) – 90% could very easily moved to Linux.

    • wally

      I remember reading, long ago, the Henry Ford intended originally to build his cars to run on alcohol, not gasoline, and for some logical reasons like: it could be manufactured. However, he had to relent for the simple reason that the petroleum industry had a distribution system in place.
      We make our environment and our environment makes us.

    • Actually, Henry Ford’s first Model-T was built to run on hemp gasoline.
      Just imagine what kind of environment would that make.

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