Advanced Search  
China Daily  
HK Edition  
Business Weekly   
Top News   
Info Tech   
Weekly Review   
Beijing Weekend  
Shanghai Star  

Info Tech ... ...
    Linux gains steam in China's OS mart
LIU BAIJIA,China Business Weekly staff
2005-03-24 08:27

When US software giant Microsoft partnered, on March 10, with Founder Technology, Tsinghua Tongfang and TCL, three of China's leading computer makers, to bundle its Windows operating system, to promote the use of legal operating systems and give customers greater added value, the absence of the country's biggest computer maker, Lenovo Group, prompted many questions from the audience.

Microsoft explained more domestic computer makers will join the programme in the future, and that Lenovo was busy with consolidation issues that resuled from its December acquisition of IBM's PC unit.

However, one question remains: Will Lenovo increase its use of Linux's operating systems (OS), which compete with Microsoft's Windows software?

Lenovo last year adopted Linux and partnered with IBM, which may be the world's biggest supporter of Linux, and Microsoft's arch enemy.

Despite these uncertainties, the development of Linux's operating systems in China has been quite fast, and is showing signs of strong future growth

A report from US-based market research house International Data Corp (IDC) indicates Linux's growing popularity in China might be more than a trend.

Harvest time

IDC's report, released on March 11, shows sales of Linux products in China reached US$9.6 million last year, and that 1.835 million copies of its operating systems were sold. Those figures were up 20 per cent and 3.6 per cent, respectively, year-on-year.

"We saw Linux penetrate the telecoms and finance sectors, which have high-end IT (information technology) solutions, and were deployed in high-end areas, such as the high-reliability and cluster servers, rather than some simple applications," said Jiang Zhenpeng, a Linux software analyst with IDC China.

"This represents a significant increase in recognition of Linux among enterprise customers," Jiang added.

Linux is based on open-source codes, in contrast to Microsoft's proprietary Windows operating systems. Linux is believed to be a strong, and promising, competitor to the dominant Windows software.

IDC reports more than 95 per cent of the Linux operating systems sold last year were for desktop computers, and that revenues from computer-server-based software accounted for almost 80 per cent of the whole pie.

Zhao Xiaoliang, president of Red Flag Software, one of the top five players in the market, agreed the increasing deployment in enterprise servers is a major reason for Linux's fast growth in China.

"Opportunities for Linux are everywhere, as there is a need for 100,000 to 200,000 new computer servers every year, and they must use either Linux or Windows," Zhao said.

Besides the increasing deployment of Linux on enterprise servers, Zhao said he believes the governments' efforts in government agencies and offices is creating huge opportunities for Linux's software vendors.

Last year, Red Flag Linux won one of the biggest government software procurement contracts ever awarded in China. The deal involved the provision of software to Guangdong and Hainan provinces, in South China, and the Xinjiang and Tibet autonomous regions, in western China.

Zhou Qun, general manager of another major domestic Linux vendor, agreed the governments' efforts made the large scale deployment of Linux on desktop computers possible. That, in turn, has been a boost for the industry.

Jiang said he believes the growth momentum of Linux will last for at least five years, given the increasing adoption of enterprise users in their IT systems, and the improved industrial ecosystem of the Linux market.

IDC predicts the Linux sales in China will grow 23.9 per cent annually until 2009.

"It is a time of harvest after many vendors worked very hard to promote the software and build an industrial chain," he said.

Jiang, Zhao and Zhou said they believe this year is a critical year for the development of Linux's products.

Jiang suggested the biggest opportunities for Linux's vendors will be the replacement of the SCO Unix operating systems in major Chinese banks and the adoption of Linux in databases.

China Construction Bank and the Industrial and Commercial Bank of China reportedly will be the first two of the four biggest State-owned banks to replace their Unix operating systems with Linux.

That change will take place this year, and the contracts will be the hottest targets for every major player in the industry, given the size of the banks and their IT systems.

Zhao said his company's strength lies mainly in the government, postal service and tobacco industry. The firm has been working to secure contracts in the finance and telecoms markets.

Database applications is another segment that offers huge potential, although there are no deals, at present, as big as those involving the two banks.

Almost all of the major database vendors, excluding Microsoft, have already partnered with one or several Linux vendors such as the team-up between US giant Oracle and Red Flag and the co-operation between Novell and another Chinese Linux vendor, Beijing Co-create Open Sources Software to adopt Linux operating systems on their database servers.

Why? They were enticed by Linux's high performance-price ratio.

Despite Linux's rapid growth, the size of Linux's share of the market is still quite small. But there are about 10 players competing in the sector.

Zhao said he is worried the fierce competition will draw every player into a price war and vicious competition, which will be disastrous for Linux.

Jiang said since big contracts usually come from only a few industries such as finance, telecoms, government and energy and the distribution of the contracts is highly concentrated, smaller players will face greater challenges.

He predicts small competitors will have to decide between co-operating or merging with larger firms.

Industry sources suggest two minor players, XTeam and Co-create, are likely to form closer ties with other players to survive the intense competition.

(China Daily 03/21/2005 page15)


| Home | News | Business | Living in China | Forum | E-Papers | Weather |

| About Us | Contact Us | Site Map | Jobs |
Copyright 2005 All rights reserved. Registered Number: 20100000002731