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IDC: Linux-Related Spending Could Top $49B by 2011

Let there be no further doubt: Linux is becoming big business. According to a new report from analyst firm IDC and sponsored by the Linux Foundation, hardware and software spending related to the open source OS hit $21 billion during 2007.

The researcher's findings further indicate that by 2011, Linux ecosystem spending will grow even larger, to $49 billion.

According to IDC, growth in the Linux ecosystem comes largely because it's increasingly being viewed as a platform for mission-critical business deployments.

"Deployments of the Linux server operating system are expanding from infrastructure-oriented workloads to more commercially oriented workloads such as database, enterprise resource planning (ERP) software and other general business processing," wrote the report's authors, IDC analysts Al Gillen, Elaina Stergiades and Brett Waldman.

These areas, they added, "historically have been the domain of Microsoft Windows and Unix. Where once Linux was seen by customers primarily as a low-cost infrastructure solution, it is now increasingly viewed as a solution for wider and more critical business deployments."

The total Linux spending described by IDC includes software as well as hardware and services-related expenditures. When it comes to software alone, revenues are far lower: The researcher reported that Linux software revenue is currently $10 billion, a total that's projected to grow to $31 billion by 2011.

When compared to the overall software market, Linux's share also remains tiny. IDC notes that Linux currently accounts for only 4 percent of the $242 billion spent annually on all software.

"It takes a decade for any operating system to really get its footing in an existing, established market," Gillen said in an e-mail to InternetNews.com. "So it was always unlikely for Linux to unseat existing competitors quickly."

Still, IDC expects to see sizable growth in this regard as well: Linux's share of total spending on software is projected to rise to 9 percent by 2011. At that time, the software market will be raking in $330 billion in revenue, according to IDC.

That growth is expected to come in spite of challenges to Linux's continued growth. In particular, IDC sees both opportunities ahead for Linux, along with threats from Windows and Unix.

"An important enabler of Linux adoption has been the migration of deployments away from Unix on higher-cost RISC platforms to Linux aboard lower-cost industry-standard x86 platforms," the analysts wrote in the report. "Nevertheless, [Unix] is a sizable market with a significant ecosystem surrounding it. On the x86 platform specifically, if OpenSolaris gains traction in the market as an alternative open source solution on the x86 platform, Linux could have a more direct competitor on the highest-volume platform for Linux."

It's a somewhat different story for competition against Microsoft Windows. Gillen added that while Windows Server 2008 may be a tempting purchase for some IT shops, it probably won't wind up enticing many defections from Linux.

"Windows Server 2008 may make Windows somewhat more attractive to users migrating off of Unix," Gillen told InternetNews.com. "But traditional Linux customers are unlikely to suddenly be more favorable to Windows just because Windows Server 2008 has arrived."

While Gillen said Linux is holding its own against its larger, more entrenched competition, he did note that the open source OS's ecosystem is still playing catch-up to Windows and Unix in one key area.

"Linux has evolved well, but if there is anything that I can point to as taking longer than expected, it's the momentum of applications on Linux," he said. "We see that accelerating now, but it has taken a fair length of time."

Despite gains by Linux on the server side, it's not clear whether any of its success will spill over onto the desktop.

"The challenges and opportunities are very different for Linux on the client side," Gillen said. "At this point, we see no direct relationship between the success of Linux on the server side that drags the Linux client through."