The compelling economics of Linux Posted by Adel Mubarak , Friday, October 23, 2009 at 11:56 PM, in Labels: FOSS

The Economics

Today the Linux Foundation issued a report looking at the value of the Linux platform in terms of code. This was an update of a 2002 study that estimated the value then at $1.2 Billion. Today’s value: $10.8 Billion. The study focused on the Fedora project, which has been a core part of Linux success in the server and desktop market place. Although it wasn’t specifically covered in this paper it is also worth applying the economics of Linux to one of the fastest growing segments of technology; mobile devices, consumer electronics and low cost netbooks. This is the future of Linux and the smart bets are leveraging a $10.8 billion investment to the hilt.

Linux is Everywhere

I am constantly amazed by how rare it is to work with any consumer electronics (CE) device that does *not* run on Linux. Other then two big markets — laptops and mobile phones, nearly every new consumer electronics device runs Linux. Sony televisions, Amazon Kindle, Dash automotive GPS, and nearly every other device you can imagine.

A CE company can either try to roll their own operating system, license a proprietary one like Windows or VXWorks, or use Linux. The reasons they use Linux are simple. It is easiest to hire people familiar with it. It supports more devices than any operating system in the history of the world. It is completely open, so if something doesn’t work, you can fix it yourself or pay someone to do it. There is amazingly great support available from mailing lists, or commercial support available at any service and price point. You can brand the device however you want. And it gives you a real Internet experience, with the capability to do any level of networking and application support.

One to Watch: Moblin

The final two frontiers for Linux in consumer electronics are mobile phones and laptops. I’d like to congratulate Google on shipping their first Linux-based phone this week. This is a great accomplishment, and Android should prove to be a major competitor in building a mobile phone ecosystem.

Another consumer electronics project I’m excited about is Moblin. Though initially focused on NetBooks (i.e., small laptops), I see Moblin as creating the ideal platform for a large universe of devices from MIDs to in car entertainment and more. Unlike Android, which uses Linux at the base but rewrote most of the upper level software, Moblin leverages the enormously valuable work of the entire Linux ecosystem (that $10.8 billion). But they do this while working to fix the small bugs and incompatibilities that can still cause frustrations in desktop Linux. And by working within the Linux ecosystem, the improvements they are making to a whole array of different packages and libraries will be passed back to the upstream authors, so that all Linux users can take advantage of them and adding even more value to that multi-billion dollar pie.

In a couple years, I expect Moblin to be playing the role of a standard platform for netbooks, MIDs, consumer electronics, and more. Already there is an incredible ecosystem around the platform with hundreds of ISV’s, dozens of hardware OEMs, and many Linux operating system vendors on board. Given the compelling economics of their approach I think it will be harder and harder to find devices that don’t use it in the future.

George Gilder wrote an enormously influential article in 1993 titled Into the Fibersphere. He stated:

” As industry guru Andrew Rappaport has pointed out, electronic designers now treat transistors as virtually free. Indeed, on memory chips, they cost some 400 millionths of a cent. To waste time or battery power or radio frequencies may be culpable acts, but to waste transistors is the essence of thrift. Today you use millions of them slightly to enhance your TV picture or to play a game of solitaire or to fax Doonsbury to Grandma. If you do not use transistors in your cars, your offices, your telephone systems, your design centers, your factories, your farm gear, or your missiles, you go out of business. If you don’t waste transistors, your cost structure will cripple you. Your product will be either too expensive, too slow, too late, or too low in quality.”

The same is becoming true with Linux, and for one of the fastest growing segments of computing, the project to watch is Moblin.