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SCO Loses in China as Linux Gains

The Linux market in China continues to grow, according to a new research report from IDC. And it is apparently growing partially at the expense of Linux nemesis SCO.

IDC's "China Linux 2006-2010 Forecast and Analysis" report pegs the compound annual growth rate for 2006 to 2010 of Linux in China to be 34 percent, bringing revenues to $51.1 million.

In 2005, Linux revenues grew by 27 percent over 2004 reaching nearly $12 million. However, Linux revenues in China are still a very small part of Linux's overall global sales, which according to IDC, were $5.7 billion in 2005 worldwide.

Linux's 2005 growth in China is being partially driven by, "large-scale SCO Unix replacement by major banks and industrial projects, such as telecommunication and Internet cafes," according to IDC.

SCO just began shipping its OpenServer 6 product a few weeks ago as part of its own initiative to improve its China efforts.

"SCO is an important technology provider for China because the company provides the technology infrastructure for running many of China's largest banks and other institutions," said Tim Negris, executive vice president for worldwide sales and marketing at SCO, said in a statement.

But Linux is well-situated in one of China's largest banks.

In April 2005, Turbolinux signed The Industrial and Commercial Bank of China (ICBC) to a three-year deal to integrate Linux across its banking network.

ICBC customer base includes 100 million clients across 20,000 branches in mainland China.

Desktop Linux also made some inroads in China in 2005.

Debian GNU/Linux-based Sun Wah Linux in October of 2005 signed a Chinese Education ministry to a deal amounting to 142,000 Linux PCs.

At the time, Sun Wah claimed that it was the largest Linux desktop rollout in China.

Bragging rights for the top Linux distribution in China have been claimed by Novell.

In March, Novell cited statistics from China-based analyst firm CCID Consulting, which reported that Novell held a 25.1 percent revenue share of the China Linux market.

And in August 2005, the company cited IDC stats showing it held a 32.9 percent market share.

Regardless of who actually is the leader, there is no doubt that the market for Linux in China is very competitive.

"The China Linux market featured unprecedented competition in 2005, which will continue well into 2006," Nielse Jiang, Software and Services Analyst for IDC China, said in a statement.

"As a direct result of such intense competition, price wars will be inevitable in 2006. Most of the public tenders closed with relatively low prices in 2005.

"Keen price competition continues to serve as a major barrier to the China Linux market."