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IDC: Linux support sales to break $1bn in 2012

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So you think companies sell $1bn in Linux support contracts a year worldwide? Think again. That isn't going to happen until 2012, and maybe not at all if the trends of using commercial distros without paying for support continue apace.

Al Gillen, the operating systems and virtualization analyst at IDC, wrapped up his worldwide Linux operating environment forecast, which spans from 2009 through 2013, just before ducking out on holiday. And according to that report (which you can get here if you feel like shelling out $4,500), the for-fee global revenues for Linux operating system support, which is mostly for servers, rose by 23.4 per cent in 2008 to hit $567m.

IDC said in an executive summary of the report - which has next-to-no data in it - that this was "a continuation of a moderating trend for year-on-year Linux server operating environment (SOE) revenue growth."

That executive summary also said that "the big get bigger," with Red Hat and Novell accounting for the lion's share of commercial Linux support revenues, and more interestingly, in many regions of the world Red Hat and Novell have the majority of unpaid but installed Linux licenses, as well.

The summary says that unpaid instances of Linux for servers captured an incremental portion of shipment share in 2008, which means unpaid versions of Red Hat Enterprise Linux, Novell SUSE Linux Enterprise Server, and so on are growing faster than paid-for Linux server shipments. You can blame the bad economy for some of that trend, of course. And Gillen did in his abstract.

"The economic downturn is impacting nearly every IT market segment and has placed its mark on the Linux server operating environment and client operating environment markets," Gillen wrote.

"The long-term prognosis for Linux is good," he continued, "but we see 2009 as a turning point for the nature of Linux adoption and deployment, as customers rationalize through the new economic realities and factor in other considerations such as the best way to use virtualization software. In the end, the markets of tomorrow are going to behave differently than the markets of the past."

That's all the data IDC gave out on the report. But it looks like Matt Asay over at Cnet, who also works at open source CMS-maker Alfresco, had a look-see at some of the IDC data and he dribbled enough numbers into his story that, along with some comments and numbers made by John Dragoon, the chief marketing officer at Novell, make it possible to put together a revenue picture for 2007 and 2008.

It looks like Red Hat's Enterprise Linux support revenues grew by 14.8 per cent to $367m in 2008, and Novell, thanks in large part to its marketing alliance with Microsoft, was able to post a 50.3 per cent growth in support fees for SUSE Linux, hitting $169m. That leaves only a paltry $31m for other commercial Linux distros, who saw, in aggregate, about 13.1 per cent growth in 2008.

IDC is forecasting that Linux support sales will grow at a compound annual growth rate of 16.9 per cent between 2008 and 2013, according to Asay, and Novell says the market will exceed $1.2bn by 2013 according to IDC's numbers.

That is, of course, as long as companies don't install more instances of RHEL and SLES without a support contract than they do RHEL and SLES licenses with a support contract. IDC is now projecting that by 2013, the number of commercial Linux server licenses deployed without a support contract - I'm not talking about Fedora or openSUSE here, but RHEL, SLES, and the like - will match the number that are shipped with paid-for support contracts. This is exactly the opposite trend that Red Hat and Novell need to grow their companies, and in the case of Novell, to make its Linux business profitable in the first place.

It will be interesting to see how Red Hat and Novell get out of this conundrum. ®

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