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IDC: Open Source Revenues to Almost Triple by 2013

The open source software industry has an unlikely benefactor--it turns out that the global recession is one of the best friends that open source can have as businesses from large to small that are looking to save money have been opening their IT shop doors wide and giving it a try.

According to a new Worldwide Open Source Software 2009-2013 Forecast, conducted by Boston-based International Data Corp., open source software (OSS) revenues have heated up as the global economy and recession worsened last year, and it looks like the trend will continue. How much will it grow? The study reports that global OSS revenue for 2008 was $2.9 billion, which is expected to grow by 34% in 2009 to $3.9 billion. By 2013, that global revenue growth is expected to hit $8.1 billion.

"The OSS market has seen a strong boost from the current economic crisis," said Michael Fauscette, the IDC Software Business Solutions division analyst who wrote the forecast. "OSS is increasingly a part of the enterprise software strategy of leading businesses and is seeing mainstream adoption at a strong pace."

There is, however, a reality check here--those revenue numbers still pale compared to the global revenues earned by sales of proprietary software applications by a huge margin. According to IDC figures, proprietary software revenues in 2008 dwarfed the OSS revenues--$137.3 billion compared to $2.9 billion, while projected revenues in 2009 are $138.8 billion for proprietary vendors and $3.9 billion for OSS. By 2013, the revenue gap is still huge and favoring proprietary products--$169.5 billion compared to OSS's $8.1 billion.

The good news for OSS, however, is that the recent revenue growth spurt for the industry comes at a good time and does show its promise, Fauscette said. "It’s a big percentage of small numbers," he said. "It's still early but there's still a lot of room to grow."

At the same time, though, OSS revenues won't likely be catching up to the rest of the software market any time soon. "I don’t see any huge enormous threat or danger right now for the big software companies' bottom lines but over time... it's going to continue to grow," Fauscette said. "I think the days of ignoring it are gone. This is mainstream stuff now. This is not like the Wild West and you're [not] taking a risk doing this. Companies understand that."

In addition to the global recession fueling OSS revenues, another key factor is that open source is seen as a far more acceptable and worthwhile alternative--especially one that can save money for cash-strapped corporations--than ever before in its brief history, Fauscette said. That new-found acceptance is critical to the fast recent growth of OSS, he said.

"[Open source] companies are gaining customers," he said. "It's not just operating systems anymore. It's not just Linux, it's still moving up the stack, to middleware and applications."

But that hasn't happened everywhere, he admitted. "On the desktop, open source hasn’t really made a dent," he said. "Ubuntu has grown but is not huge. Last year we started to see huge growth in middleware."

Has the upward revenue trend for OSS been a surprise?

"I wouldn't call it unexpected," Fauscette said. "It was the normal movement of the adoption curve. A few years ago, two to three years, if you would have asked such questions of CEOs and CTOs they would have said they didn’t allow open source in their shops in significant systems. Now you're more likely to hear that they're working on an open source policy or have one in place. The poor economy helped with that."

Also having effects on open source use and adoption are the emerging cloud infrastructure and business process outsourcing (BPO), both of which heavily leverage OSS applications, Fauscette said. Cloud infrastructure allows corporate users to receive and pay only for the computing power and services they require on an as-needed basis, without huge up-front investments. BPO also offers cash savings to users by reducing their costs through economies of scale, and the use of OSS to power much of its processes, Fauscette said. "I think that’s going to drag a lot of open source into this."

For users buying such cloud of BPO services, they don't object that OSS is making it all work for them, he said. "Do you really care if you want to pay a provider to provide you with a place for putting an application that you want to use in the cloud" Do you care that it's open source? You don’t care. All you care about is that it meets the service level you need and your price."

Also notable--lots of OSS today comes from some of the largest IT vendors, including IBM, Novell Inc., Oracle Corp. and others. "They all have big open source components nowadays, and can sell services and support," Fauscette said. "That’s going to be the norm. You're going to have proprietary products and where they can leverage open source, they will leverage open source. That’s a reasonable addition to their businesses."

A Polish translation of this article can be found at Jakilinux.org.

 

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