Blog: Pete Loshin

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Research Now Predicts Significant Open Source Software

IT industry research giant IDC released a new report last month. The press release, Worldwide Revenue from Standalone Open Source Software Will Grow 26% to Reach $5.8 Billion by 2011, IDC Research Indicates.

The actual report will set you back $1,500, but the press release is free, and two of the key points people are taking away from the release are that, first, "[w]orldwide revenue from standalone open source software reached $1.8 billion in 2006." In other words, companies are currently selling open source software for real money. And second, "[t]his revenue will reach $5.8 billion in 2011...." In other words, not only are they generating real cash flows, but those revenues can be expected to continue growing at an annual rate of 26% for at least the next few years.

This report is getting a lot of attention, though most outlets are covering it as they would almost any other press release about a research report. Harper Mann, "IT Troubleshooter" at InfoWorld, did some real reporting by talking to a dozen CEOs at open source friendly companies, CEOs Weigh in on Latest IDC Open Source Research. It's worth a look if only to see the list of companies that rely on open source software.

My biggest question: what exactly is "standalone open source software"? I assume that the answer is in the body of the $1,500 report; some of the online commentary tells me that "standalone OSS" refers to software that isn't bundled with anything else--which I find unsatisfactory, since most of the volume of software included with any Linux distribution is bundled from an assortment of sources.

A slightly more satisfactory definition comes from Allen Bernard at CIO Update, in his story, Open Source Adoption Continues Unabated, where it's defined as "OSS that has a revenue model associated with it like SUSE Linux or RedHat".

A couple of billion in revenue with double-digit growth for the next few years is very noteworthy, but to put it in perspective consider this: Oracle's revenues (per Yahoo! Finance) were $17 billion for the last year; Microsoft's were almost $50 billion.

The thing about IT industry research is that you've got to take it with several grains of salt. The research firms don't get paid to produce unspectactular results: most research is funded by companies that expect to benefit in some way by the results (and the suspicion that some research results may be skewed as a result can never be escaped). At the same time, the research firms often err on the conservative side simply because most of their customers have big investments in the status quo.

Bottom line: I'm quite sure that the OSS business will produce results that are at least as good as IDC's numbers--and I would be very surprised if their results over the next five years are very much better.

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