Wednesday, April 08, 2009

The Opportunity for Linux in a New Economy

Al Gillen is back for the second year at the Collaboration Summit.


Economic Impact
Trends from past recessions and how that applies today
The role of virtualization software
Outlook for the Linux ecosystem
Essential Guidance

There is a slowdown in IT spend - a Capital Expense (capex) reduction is mandatory for many customers, work in North America, second is Western Europe, less in Asia Pacific, at least for now.  Nonpaid solutions are likely to be hot:  Linux, open source DBMS, middleware, tools.  Watch for update on non-paid virtualization solutions.
ROI Window compressed dramatically, paybacks not realized this fiscal year are nonstarters.  Difficult to justify new initiatives today.
New migratoin initiatives are unlikely.  If a migration was not already underway, it is unlikely to start now.  Existing skills will determine whaat is and is not done.
Everybody wants to declare victory in a down market.

In a down economy, everyone is loosing money.  No business does well, but we look more at what dynamics will change as a result of the current downturn over the next three years.

A chart on x86 server shipments shows a marked drop in Q4 2008 and is projected to return to current previous highs around the end of 2010.

Roughly a drop from 8+ million servers a year to about 7 million x86 servers a year.

It appears that the software spend trend matches the hardware trend, although the software trend remained positive (ranging from a high of 14% growth per year to a low of about 2% growth per year) with a projected high of about 7% growth per year by 2013.

Legacy of the 2001-2002 recession:  That was the original demarcation line for the acceptance of Linux in the market place.  Customers also began to buy major new servers for Linux deployments around that time.  This also drove the build for the software on Linux.  About that time CIO's claimed that there was no Linux in their data center while people in the trenches pointed out that they were using Linux at the fringes and the grass roots entrenchment had begun in earnest.  That also drove the beginnings of the standardization around Linux.  Linux was just then available on a number of diverse hardware platforms, driving a level of commonality in application availability - especially open source applications such as Apache, across the Enterprise.

Virtually all of the paid market for Linux is in the Enterprise space today.  Some geographies are focusing on the non-paid distros.

After the recession, there was a strong growth period for several years but also that recession drove a strong push towards virtualization and consolidation.

"Free" servers became widely available thanks to virtualization software.  Unix is increasingly under siege from Linux... and Windows.

Cloud might get a boost but revenue from cloud Linux might not.

Windows, of course, does not go away.  Nor does Microsoft cease to be a fierce competitor.

Tranitions eventually  mandate rationalization and assimilation - Managing nonpaid OSes, Managing hypervisors and guest OSes.

Virtualization as a Solution

Lifecycles for OSes and apps will be extended.  Solutions that foster cost avoidance will be favored.  OSes that were in use will probably stay in operation much longer than they have historically.  For instance, RHEL4 apps and environments may remain in the data center for more than the typical 10-15 years and more like "as long as the application has value" - which could be over 20 years in some cases.

Solutions that cost $0 will be tested and adopted.  The initiatives will result in permanent changes to how IT does business.

The Virtualization Effect
:  We see a decoupling of hardware and software, via virtualization.  Virtualization takes two basic forms:  independent guests ("stand alone" OS) - associated with nonpaid copies, less c; affinity with less critical workloads.
Replica guests ("child" copies) - Associated with enterprise distros, more critical workloads, virtualization rates higher with enterprise subscription.  The rate of virtual systems to physical systems is likely to increase to 2-1 in the datacenter in the next 18 months - where it was 1-1 up until about three (?) years ago.

Where does virtualization go next?

Pricing has been driven to $0
Value add moves to management
Integration with hardware, OS
Uniguest installations
Heterogeneous hypervisor management
Managing offline images critical

Al predicts that it might take 3-5 years for KVM to work its way into datacenters as a primary virtualization platform.  What this means to Xen is unclear but probably does not impact most enterprises much over the next 3 years and they will have time to devise a migration strategy.

Linux and Cloud Computing

Infrastructure Cloud - services such as CPU, networking and stroage; often presented as a virtual machine over the Web; user installs and manages their own OS and applications; pay by the megabyte, gigabits, MIPS, etc.;  Examples:  Amazon EC2.

Platform Clouds:  An operating system and possibly infrastructure softare; hosted in a web-Accessible location; may proivde apploication developre and runtime envrionement:  Example Any Web hosting provider

Applicatoin clouds:  Virtualize and entire application (aka SaaS) Consumed as a solution or indvidual services through APIs.  Examples:, Google

Linux has already had a big play in all of these areas.

Outlook for the Linux ecosystem

Chart showing Linux distro sales from Red Hat and Novell - both showed positive growth without much impact up to Q4 2008 share numbers.  Interestingly Red Hat was closer to $140 million in licenses where Novell was closer to $20 (from memory) - but Novell's growth was less impacted than Red Hat's, and both had nearly negligble impacts from the economy thus far.

Still forecasting a 15.7% CAGR for Linux, with a shift in what markets moving up the stack are growing.  The distro itself is a tiny portion of the overall spend, hardare is third smallest, with App development and application software being the two areas that grow the post, with Services being perhaps the second largest area of growth (I can't see the exact numbers but the slides should be published on the LF web site).

Al pointed out in one of the graphs that a smaller market share easily mangifies a CAGR - so comparing Windows CAGR on a larger market with a larger CAGR for Linux in a smaller market does not mean that Linux has taken over Windows.  At least not yet.  ;)

In key workloads, Collaboriative, Application Development, IT Infrastructure, Web infrastructure, decision support are called out in some detail and their corresponding growth rates (worth reading the chart).

Drivers for Linux:
 Capex concerns, virtualizatoin -
guest acquisition costs, ease of deployment, Non-paid Linux, larger ecosystem is good, open source layered SW
Increasing integration
software appliances
- new form factors
- new GTM sscenarios

Challenges for Linux
- Capturing new customers - particularly in a down economy, freeing up resources, staff training
- Non-paid Linux and OSS - generates on revenue, dries up survival funding
- Microsoft - Windows solutions, applications
- Generating revenue from Cloud

Essential Guidance
- Look at the current economic downturn as opportunity
- user virtualization as an integration point for commercial and nonpaid Linux
- Remember that revenue is not hte only metric that matters
- However, revenue is important
- Missed a bullet or two, sigh.  My fingers are tired.  ;)

Question from Matt Domsch:  Is there a distinction between Public and Private clouds?  Al:  Yes.  There are places for internal clouds and probably a hybrid between the two at many customers.

What about the guests in virtualization.  Is there any preference for Linux or Windows?  Al:  Currently there is a larger set of Windows installations often driven by software applications.  Aging Linux apps are often infrastructure related and it is often easier to replace infrastructure servers than to replace custom Windows apps in the Enterprise.

Linux rate may be similar to the windows rate in the next 6-8 years.

How do you measure paid vs non-paid Linux?  It seems to some that there are more non-paid installations than the 50-50 split on the charts might indicate.  Al: Based on world-wide surveys, returns say somewhere from 35-55% are non-paid.  That number probably reflects Corporate users.  There are a fixed number of servers out there so that number is used as a way to validate the response to some level.

A comment from the audience suggested that there might be a business tradeoff to consider on non-paid OSes - if you are paying for a kernel engineer or administrator to support the non-paid OS have you really saved money by using a non-paid OS?

Jim Zemlin wound up the session with the observation that non-paid Linux is obviously a key question.  But it is worth noting that if you use a non-paid OS you won't be going to jail, unlike using some other OSes without paying.


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