Just add Linux : The Union of Commercial and Open Source Software into existing Business Models

Open source software combined with commercial licensed software has become a market reality as open source technologies, like Linux and Apache, which are already tremendous market successes, are combined into business models by vendors who want to win in the marketplace. It's happening today and will continue to flourish. Here's why: Linux Market Penetration - Already a solid platform for servers and growing fastest. To make a change, the market needs a catalyst - and that's Linux. The impact that Linux is having in the market is significant. According to analyst firm IDC, Linux is the fastest growing server operating system in the market, and second in volume only to Windows NT/2000 through 2005. With the projected growth of Linux on the server, spurred on by killer-apps like Apache and Samba, a market opportunity is born. The industry is now taking the next step to deliver commercial software on the open source platform. According to IDC, the market opportunity, in revenue, for software sold on Linux is now projected to grow in excess of 100% compound annual growth rate through 2005.

It's still all about business, business models, and value add to the customer - just add Linux. Linux has changed a lot of things in the IT industry already, but it has not changed the fundamental way customers buy value - and the value net that they buy it from. What is this value net? It is the network of players, including the IT vendors themselves, Independent Software Vendors (ISVs), Value Added Distributors (VADs), and Value Added Resellers (VARs) that deliver value to customers in the form of solutions. All of these players are already incorporating Linux into their business models and solution portfolios. And they're doing it by mixing and matching the value-add they provide, often with commercially licensed software, on top of Linux, Apache and other key open source technologies.

IT Vendors are doing it The industry's largest IT vendors have embraced Linux and other open source software. IT vendors are not randomly open-sourcing commercially licensed software, but they are enabling open source software on top of Linux and using Apache, where appropriate. In some cases those same IT vendors also open-source technology to help make Linux more robust. An example is when vendors contributed Journal File System implementations to the open source community, or when vendors helped accelerate the adoption and implementation of standards, like XML, by contributing an XML parser.

ISVs are doing it ISVs are rapidly turning to Linux to capitalize on the number of Linux-based solutions being sold. They are supporting multiple hardware and software platforms, all while minimizing their development costs. IBM saw a growth rate of over 40 percent in the number of new Linux applications created last year. ISVs have created robust e-business solutions running on Linux in every major industry and solution segment, including financial, retail, customer relationship management and mid-market accounting. In general, ISVs are selling their commercially licensed software for use on Linux just like they do on any other operating system.

The Channel is doing it VARs and VADs are riding the Linux wave as well. At IBM alone, the number of business partners actively enabled for Linux grew 800 percent since the beginning of 2001. These VARs and VADS have not changed their business models to incorporate Linux. They provide value to customers mainly through services and the specific solutions they provide. Adding Linux support is a quick and easy way to increase their market reach.

The Market is doing it The key pieces of the value net are in place around Linux today. While business models have been a hot topic of debate in the open source community over the last year, it is clear that a successful business model hinges on the ability to provide value-add to customers. Even more important, is that everyone can participate in that environment - the open source community, IT vendors, ISVs, the channel and ultimately the customer. Are you listening, dear customer? Business Models - By IBM Thailand Co., Ltd.

Regards,
On-uma Vattanasuk
Communications Specialist
IBM Thailand, 388 Phaholyothin Road, Bangkok 10400
Tel. [662] 2734117
Fax. [662] 2730687
E-mail : onumav@th.ibm.com