China Daily  
Top News   
Home News   
World News   
HK Edition
Business Weekly
Beijing Weekend
Shanghai Star  

Home Business ... ...
    Open source software faces hardship
Liu Baijia
2004-05-11 06:25

Open source software represented by the Linux operating system still faces great difficulties in becoming a booming business in the next few years, despite its fast growth and support from the Chinese Government, said a senior industrial analyst.

"The business model of Linux operating systems has not been proven to be mature, especially in China, and it is still far from changing the fate of the Chinese software industry," said Huang Yong, senior vice-president of CCID Consulting Co Ltd, an information technology market research house under the Ministry of Information Industry.

Linux, as compared with proprietary software like Microsoft Windows and Unix operating systems, opens its source code to other developers and is believed to be more transparent and safe by some people in the industry.

It also allows developers to make improvements on its core element free of charge for research purpose and charge a small sum of royalties for commercial uses. This is why it is regarded as being a short-cut to breakthroughs in the domestic software industry in some countries like China, Japan and South Korea, which formed an alliance to develop the technology in March.

However, CCID Consulting reveals about 30 per cent of the 300,000 units of personal computer servers used Linux operating system last year, while 60 per cent adopted the Microsoft Windows operating system.

Meanwhile, the Linux market was only 66 million yuan (US$8 million) in 2003, while the Windows market was around 1.7 billion yuan (US$205 million).

Huang pointed out that the lack of a sustainable business model is the main obstacle for the slow progress of the Linux operating system in China. Linux developers mainly obtain revenues from government financing, government procurement orders or service charges, but the market is too small to support the emergence of influential players.

Small revenues also mean small investments on development.

While Microsoft spends US$6.8 billion on development this year, Chinese software companies depend on financing from government programmes and their meagre development spending.

Small research and development spending also leads to a lack of applications support for the Linux operating system.

While Microsoft's operating systems have a full range of supporting applications from office, media and Internet software and business applications, many Chinese users of Linux operating systems have to search the Internet to find some application software.

However, Huang believes the Linux operating system will surely provide an opportunity for growth in the domestic software industry.

According to CCID Consulting's forecast, the Linux operating system is expected to grow by 47 per cent in average in the coming five year and the market will reach 450 million yuan (US$54 million) in 2008, while Microsoft Windows systems are expected to grow 16 per cent yearly during the period.

(China Daily 05/11/2004 page10)