Linux: Rumors of Its Demise are Greatly Exaggerated

Filed in LinuxTags: Windows

Scott Spoonauer of LaptopMag seems to be spending quite a bit of time trying to insinuate that Linux has missed its opportunity for widespread adoption. For example:

  • Spoonauer claims that the window of opportunity for Linux (as a desktop client) has closed, maybe for good. He gives some examples of the closing window of opportunity, such as BestBuy opting for the WinXP version of the EeePC instead of the Linux version, Wal-Mart "pulling" Linux PCs from store shelves and opting for internet-only sales, and Dell thus far being the only "major" PC vendor to offer pre-installed Linux.
  • After getting slammed in the comments to his previous blog post, Spoonauer then goes about trying to defend his premise regarding the window of opportunity closing, but conceding that he may have been premature in proclaiming a "death knell" for desktop Linux.
  • Spoonauer then attempts to portray some objectivity by interviewing some analysts who essentially say, "not so fast." Their conclusions are that the BestBuy decision has no real bearing on the future opportunity of Linux, and that Microsoft is making concessions with respect to licensing in order to fend off a legitimate threat from Linux.
  • But the Spoonauer goes right back to his premise, interviewing yet another expert in attempt to discount EeePC Linux sales. Here, the premise is basically that while the Linux EeePC has sold over one million units worldwide, it has only sold about 100,000 in the US, which the expert claims have all gone to existing Linux geeks.

Others are picking up on the meme, and refuting it. See Linux Watch and Linux Solutions. Let's do the same, shall we?

As I have already pointed out, Microsoft's dual actions in extending the end-of-life for Windows XP and in offering pennies-on-the-dollar licensing for ULCPCs is a de facto concession of the threat of Linux. These actions are a stop-gap gambit to avoid loss of market share, and are neither sustainable nor viable, long-term.

OEM licensing (presumably, Windows and Office) accounts for 95% of Microsoft's revenues. Thus, Microsoft finds itself in a no-win situation in the ULCPC market: either concede the market to Linux, and thus generate no revenue due to no OEM licensing, or else give away OEM licenses (essentially for free) and thus generate no revenue from the OEM licenses they do procure.

The Linux business model is entirely different. With a few rare exceptions (SLED, Xandros, etc.), Linux distributions do not make money by selling OEM or end-user licenses for use of their OS; rather, the Linux business model is to give away the software and then make money by selling support contracts.

So, extrapolating the current environment several years: Microsoft continues to generate no revenues by giving away OEM licenses and offering support for an otherwise end-of-life operating system, while the Linux revenue stream is entirely unaffected. Linux is positioned to win any protracted desktop market share battle of attrition.

The second fatal flaw in Spoonauer's argument is the inherent assumption that US market share will continue to dictate the adoption rate for desktop Linux. While this assumption may hold true today, it is quickly being invalidated.

While Microsoft has entrenched itself in the various sales channels in the US (retail outlets, vendor online sales, etc.), it is quickly losing its grip outside of the US, due to increasing open source (and, in some cases, anti-Microsoft) trends, especially in Europe and Asia - not to mention the growing computer-user market in third-world countries.

Government agencies, educational institutions, and others are moving desktop installations wholesale from Windows to Linux, by the thousands and tens of thousands. Each one of these desktop Linux installations directly impacts Microsoft's bottom line.

In short, the jury may still be out regarding the ability of Linux eventually to realize its full potential - and market share - but if Windows remains the only viable threat to Linux desktop market share, Then the Linux window of opportunity will remain open in perpetuity. Microsoft's business model will ensure it.