Economic turmoil has always driven change (and sometimes innovation) in the data centre, and this global recession will be no different. This time around, like the recession that started in 2001, it looks like Linux is going to be one of the big beneficiaries.
That's the prognostication coming out of IDC, anyway, which was commissioned to mull over the future of platforms in a report (PDF) sponsored by the Linux Foundation. The Linux numbers are something of a relief in a world where the negative sign is getting a work out these days - unless you happen to be peddling proprietary or Unix alternatives to Linux. Then you might be experiencing a bit of déjà vu.
The Linux installed base, by IDC's reckoning, is roughly split between Linux installations that are covered by service subscriptions and those that are not. Through the end of 2008, IDC estimates that there are 1.5 million Linux server subscriptions across various vendors and flavours, and that since 2003, that installed base has been converting to so-called "enterprise" variants from other server variants. IDC estimates that the installed base of unpaid Linux server installations is nearly as large and is growing at the same rate as growth in paid-for subscriptions. In terms of annual shipments, IDC believes server buyers consumed just under 500,000 Linux servers in 2000, and by the middle of 2003 the ship rate had grown to 1 million units. This year, if trends persist, the rate should push through 1.5 million units.
(Incidentally, that IDC Linux server installed base figure above does not seem to jibe with statements made by Jim Whitehurst, Red Hat's president and chief executive officer. In December, he said that it had 2.5 million paid Enterprise Linux subscriptions. Perhaps Red Hat's renewal rates on subscriptions are not as high as its quarterly top 25 deal renewal rate, which is damned near 100 per cent.)
Of course, the Linux server market is not really about servers so much as the money that these servers generate up the stack. While Red Hat makes a decent living peddling Linux and a few other players are trying to get there (most notably, Novell), the Linux software ecosystem is much larger than the money coming from subscriptions imply and, more importantly, the growth in software spending atop Linux is expected to grow at a much faster rate than other platforms, during the recession and after it. That said, Linux has a long, long way to go to catch Unix in terms of the size of the software spend, and Windows would seem to be unreachable unless something radical happens in the market.
According to IDC's estimates, Linux-related software spending is expected to triple from $12.3bn in 2008 to $35.5bn in 2013, representing a compound annual growth rate of 23.6 per cent over those five years. While Linux-related software revenue growth has been slowing - it was about 37 per cent in 2006, and decelerated to just over 30 per cent growth in 2008 and is expected to head down towards 20 per cent this year - Windows and Unix platforms saw much faster revenue declines for software sales on those platforms in 2008. Similarly steep declines are expected this year, pushing Unix-related software sales down to basically zero growth this year and Windows-related software revenues getting maybe a few points. Assuming there is a recovery late this year or early next, IDC reckons that software spending on Unix platforms will rise from $69bn in 2008 to $74bn by 2009, representing a compound annual growth rate of a mere 1.8 per cent over those five years, while Windows platforms will see software revenues grow from $149bn in 2008 to $206bn in 2013, a 6.6 per cent CAGR. For a frame of reference, the overall software market is expected to grow by 5 per cent (compounded annually) between 2008 and 2013. Windows will barely outpace the market (mainly because Windows platforms basically are the volume market), Unix will not, and Linux is going to outgrow it by nearly a factor of five.
The overall Linux ecosystem is not just driven by software, of course, but also includes hardware and services. IDC has just rejigged its projections for hardware spending relating to Linux platforms thanks to the economic meltdown, and concedes that there will be a "sharp reduction" in spending on new server hardware in 2009, as customers defer new system acquisitions and deploy more virtualised servers, thereby reducing footprints. Back in 2007, the entire Linux and open source ecosystem accounted for just over $20bn in revenues, and is expected to break through $25bn this year even as Linux server sales decline. The appetite for Linux applications and development and deployment tools will more than make up for that decline, says IDC. And the irony is that the Linux operating system licenses and support subscriptions themselves are such a tiny slice of the entire ecosystem that you can barely see it.
It sure ain't like that in the Windows world. Hence Microsoft has downshifted from Small Business Server, which can cost as much or more than the server that it runs on for SMB shops, to Windows Server 2008 Foundation Edition. That way, if customers are tempted to adopt open source development tools, databases, and applications, they can still deploy on a cheapo, barebones version of Windows. ®