Linux Business

This page covers the origin, course, product advantages, product diversification and future of Linux as an operating system.

Linux Origin

 Academic

 Commercial

Linux Market

 Defined

 Issues

Linux Product

 Diversification

 Leadership

Linux Future

 Growth

 Products


  • Academic
Bell Laboratories developed the UNIX operating system as an interactive timesharing system in 1969. UNIX was licensed and released to universities for comment and contribution in 1974. Five years later, the seventh release of UNIX became the commercial release, which included many features contributed by universities.

Commercial release of UNIX helped create several companies that delivered proprietary UNIX operating systems. Unfortunately, the academic community wanted a non-proprietary or open source version of UNIX. Academics responded by developing an open source mini-UNIX, MINIX system, and forming the GNU development community.

Working toward an open source POSIX operating system, the GNU community contributed components. Linus Torvalds contributed a kernel to the GNU community in 1991. Together, these components became the Linux operating system.

  • Commercial
UNIX changed IT economics by providing robust midrange computing that displaced mainframe solutions. These releases were proprietary licensed operating systems that ran on proprietary hardware. They offered midrange solutions at a fraction of mainframe cost.

As the commercial UNIX market grew, so did vendor prices. Vendors created barriers to market entrance and customer product change. The market entrance barrier was a stable commercial UNIX built on closed source code. The barrier to customer change was the migration cost from one system to another.

Linux has arrived to drive the next revolution in cost. Linux offers open source solutions at a fraction of proprietary system costs.


  • Diversification
Cost conscious companies began achieving savings by using Linux and commodity Intel-based PCs. Commodity hardware is inexpensive because it is mass-produced enough to drive down the per unit cost.

Before Linux, the IT industry saw a solution to rising costs by using Commercial Off-The-Shelf (COTS) components. COTS required a commodity hardware platform and scalable open source operating system. Linux made Intel-based PCs scalable and COTS viable. Cost conscious companies began looking for packaged Linux solutions and a market was born.

The newly formed market attracted companies to delivered commercial Linux products. Each company modified and added to GNU components, delivering their Linux version. Differences aside, it was hard to find a market leader and best-of-breed Linux solution. Although eager to implement a Linux solution, companies paused to see which companies would survive as the market matured.

  • Leadership
When competing for market share under the GNU license, it becomes critical to establish brand identification quickly. Red Hat Linux achieved the preeminent brand recognition for several reasons.
  • Red Hat was first to market with an effective GUI installation program. Simplifying the installation program enabled Red Hat to rapidly gain market share and develop partnerships with PC vendors.
  • Red Hat Linux was first to attract interest from the National Center for Supercomputing Applications (NCSA). NCSA used Red Hat Linux for Beowulf high performance computing clusters. This became the largest distributed computer in the world.
  • Red Hat was first to partner with Oracle Corporation and captured a position as the first Linux system to deliver native asynchronous IO and the Oracle Cluster File System (OCFS) in 2002. These components made Red Hat Linux Advanced Server 2.1 a complete and scalable enterprise class solution.
  • Red Hat was first to qualify as a US government purchasing certified operating system. That positioned Red Hat to compete directly against the MicrosoftTM operating systems. For other Linux vendors to enter this market, they must seek Department of Defense (DoD) Defense Information Systems Agency (DISA) Common Operating Environment (COE) certification. At present, only Red Hat Linux meets government purchasing requirements.

  • Defined
Linux has four operating system markets. They are business, government, scientific and consumer markets. Each market can benefit from the economics of an open source solution because it will lower software-licensing costs.

Factors that affect product adoption differ between markets. A mix of industry standards, certifications and features, governs them.

While companies can sell Linux under the GNU license agreement, all they can sell is their brand, service and support relationship. Therefore, product innovation provides only brief market advantages because the new code is shared with competitors.

As the Linux market matures, consolidation has begun. Linux vendors Conectiva, the SCO Group, SuSE Linux and Turbolinux have consolidated to form UnitedLinux. UnitedLinux is actively seeking ISV partnerships to compete against the market leader, Red Hat Linux. Other Linux vendors may seek partners and UnitedLinux has left the door open, hoping they join the consortia.


  • Growth
Academics have pushed the scientific market to wide adoption of Linux. While they represent relatively modest monetary impact, they have contributed to the rapid product evolution. This innovation has made the IT economics of adopting Linux too significant to delay implementation for large businesses much longer.

Consumer markets will be slow to change until independent software vendors (ISVs) of games and productivity tools port their products to Linux. Porting appears to have taken on a popular revolution among some people dissatisfied by MicrosoftTM Corporationís solutions.

  • Products
Linux products continue to consolidate. The question is which will survive. The answer is important because some buyers are waiting for that result before choosing a product.

It appears the Linux Standard Base (LSB) is gaining momentum. LSB will lead Linux into standards that cross product boundaries and minimize product diversification. When LSB becomes a standard the important market feature of the Linux products will be valued qualities.