Event
Summary
According
to recently figures from IDC, Red Hat was still the #1 distributor of
the Linux operating system in 1999 by a wide margin, with a 48% share
of the copies shipped. Trailing Red Hat were German vendor SuSE with a
15% share, and Caldera Systems and TurboLinux with 10% each. (See Figure
1) Bringing up the rear were MandrakeSoft (4%) and Corel (1%).
Figure
1.
A
potential area of concern for Red Hat is the sales growth of its next
three competitors. From 1998 to 1999, the Linux market overall grew by
89% (by units shipped), but Red Hat grew "only" 69%. This is in sharp
contrast to the growth of SuSE (175%), Caldera (175%), and TurboLinux
(450%). (See Figure 2). In addition, July, 2000 retail sales figures (as
compiled by PC Data) indicate MandrakeSoft (~32%), Red Hat (25%) and Corel
(23%) have grabbed a significant portion of that segment. [Be advised
that market share for Linux includes more distribution methods than retail.]
Figure
2.
Market
Impact
As with the server hardware market, the Linux market is starting to consolidate.
Red Hat is still the clear leader, but the "second three" (SuSE, Caldera,
TurboLinux) have closed the gap slightly. Of course, the growth rates
of the second three, although tremendous, are unsustainable (unless the
Linux market matches those rates). We expect Red Hat to maintain a 40+
% share (using IDC's metrics) of the Linux market through 2001. Although
Corel has increased its sales, we still have concerns about its long-term
viability, due to its weakened financial position, and organizational
turmoil (especially the resignation of CEO Mike Cowpland). We believe
MandrakeSoft will still be a presence in Europe, and the July retail figures
show it has started to makesignificant inroads in the US retail market.
The
"fly in the ointment" is that the market share figures are largely based
on the server market. Linux still has only a single-digit market share
in the desktop space. When/if Linux gains significant desktop market share
(greater than 15%), we expect some shifting of share percentages, as the
July 2000 retail sales figures indicate. Based on TEC's analysis (see
Caldera
eDesktop Edges Out Microsoft Windows 2000 in Functionality), we expect
Caldera to challenge Red Hat for desktop market share, although its retail
sales indicate otherwise.
[Note:
Because of the way IDC calculates units shipped - pre-installed unit sales
are not counted presently- we believe the market share figure for Red
Hat is actually higher, in the 60%-65% range.]
User
Recommendations
The evident consolidation translates into caution for users wishing to
make a move to Linux. Although market share is not a guarantor of success,
we believe near-zero market share (in a maturing market) is a warning
sign, especially if customers want long-term vendor support. For this
reason, we recommend larger enterprises stick with one of the top four
or five vendors - at least until other vendors grab significant market
share. By default, this means potential customers might want to think
twice about "betting the company" on Corel Linux. As mentioned earlier,
this is primarily due to their financials; if they can turn the numbers
around, this will change our recommendation.
As
mentioned earlier, TEC's WebTESS
software indicates that Caldera's eDesktop functionality may make it a
better choice for a desktop OS than Red Hat Linux 6.2, although we believe
Red Hat has the edge in service/support.
(This does not imply that SuSE or TurboLinux are inferior - merely that
they were not rated in the mentioned report.)