While open source adoption will continue to grow, revenues will substantially lag behind the distribution of open source software, says analyst company IDC.
In a new study released last week, IDC said the market for open source software (OSS) is in a significant growth stage. Adoption of OSS will accelerate over the forecast period of 2007 through 2011, as barriers to adoption get knocked down.
According to IDC, worldwide revenue from standalone open source software reached US$1.8 billion in 2006. This revenue will reach US$5.8 billion in 2011, representing a compound annual growth rate of 26 percent from 2006 to 2011.
However, Matt Lawton, program director of IDC's open source software business models research program, said the development and deployment of OSS is still in the early stages.
Lawton said: "The market is still quite immature, especially now that we see active open source projects in all layers of the software stack. Although we see healthy growth in revenue from standalone open source software, we must keep in mind that revenue will substantially lag behind the distribution of open source software.
"Many distributions of standalone open source software are free, while paid distributions typically are based on pay-as-you-go subscriptions rather than pay-up-front license fees," he added.
IDC's study showed that the drivers for OSS adoption include increased customer interest as more businesses realize OSS offers more choice and leverage with proprietary software vendors.
In addition, more financial backing from venture capitalists, more comfort with subscription revenue as a business model, and increased interest in OSS within larger enterprise organizations are helping to accelerate the OSS adoption rate, IDC noted.
In a recent interview with ZDNet Asia, Antony Lee, market analyst for IDC's Asia-Pacific software research, said OSS, particularly Linux, is seeing rising adoption in the Asia-Pacific region.
According to Lee, Linux client revenues in Asia-Pacific, excluding Japan, will reach US$51.5 million by 2010, with a compound annual growth rate of 28.5 percent from 2005 to 2010. During the same period, Linux server revenues are also expected to reach US$59.1 million.
"In developing markets like China and India, cost is the top criterion in software deployment, so Linux is an attractive option," Lee said. "We're also seeing more replacement of Unix servers with Linux, even in mature markets like Hong Kong, where people also realize the cost benefits of Linux," he added.
However, Lee also noted that the lack of skilled expertise is likely to inhibit adoption of Linux and other open source software in the Asia-Pacific region.
"Enterprises are worrying about whether they have enough talent to develop and support Linux-based systems. A lot of people know about Microsoft's .Net, but not the corresponding systems that run on the Linux platform," Lee said. "Businesses deploying less-known distributions of Linux may not know who to turn to for support."
In any case, Lee said, proprietary software vendors such as Microsoft are not sitting on their laurels. "Microsoft doesn't want to rule out any opportunity of selling Windows servers even as customers deploy Linux systems," he said.
"Microsoft is not trying to beat every single Linux distribution out there, but they're trying to find a way to grow with the trend," Lee added. "The alliance they have with Novell is partially to address the heterogeneous nature of customer environments."
As part of Microsoft's initiative to partner open source companies, the software giant announced Monday a deal with Linux distributor Xandros to improve interoperability between their servers. Microsoft will also provide patent covenants to Xandros customers, who will be assured that they are not infringing on the former's intellectual property.
Play video
There are currently no comments for this post.