Technology > Tech Biz
Looking at Linux in 2004
Early signs show next year could be the breakout year for the open-source operating system.
December 10, 2003: 3:24 PM EST
By Eric Hellweg, CNN/Money Contributing Columnist

Sign up for the Tech Biz e-mail newsletter

SAN FRANCISCO (CNN/Money) - I know, I know, I'm about three weeks early for my annual predictions column, but I want to come right out and say it: 2004 is going to be a big year for Linux.

Big in terms of its corporate enterprise adoption, which, according to every industry observer I spoke with, should continue apace or faster. Big in terms of a hot topic for next year, specifically with the infamous SCO lawsuits coming to a head.

And finally, big in terms of investors on both sides of the Linux equation.

Recently in Tech Biz
Beware the VoIP hype
Don't pop those corks just yet
Happy holidays -- so far
Tech turkeys that could fly in '04
Cellular's saving grace

My look ahead was triggered by the just-released results of the Gartner/SoundView IT Symposium, a semiannual confab that serves as a great litmus test for where things are headed in information technology. Six hundred IT execs were polled, and more respondents said they plan to spend "significantly more" on Red Hat Linux products next year than said they'd be spending more on Microsoft (MSFT: Research, Estimates).

Obviously, on an absolute basis, more money will be spent on Microsoft products, but Red Hat (RHAT: Research, Estimates) (which may have served as a Linux proxy to respondents) is showing strong growth at a time when overall IT spending plans for 2004 are cloudy.

"Linux is right up near the top where the greatest relative momentum is heading," said Jim Mendelson, an analyst with SoundView. Investors take note, however: The polling was done before Novell announced its acquisition of SuSe Linux. Mendelson and others I spoke with think that Novell's new push into Linux (with IBM's backing) will have a dilutive effect on Red Hat sales in 2004.

Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.

Next year we'll find out whether Microsoft's third attempt to thwart Linux momentum takes hold. The company's first solution was to ignore it. Obviously, that didn't work. Next, the company sought to disparage it, which also didn't work. Now, the company is fighting the encroachment by acknowledging its presence but demonstrating what it sees as Microsoft's product advantages.

"Microsoft is now taking a viable approach," said Al Gillen, an analyst with IDC. "It's a more practical way to go about it."

Watch for more antics-laden presentations by Steve Ballmer, as he touts Microsoft's perceived actual cost advantage over Linux offerings. IDC recently reported that Linux-based server sales hit $743 million in the third quarter of 2003, up 49.8 percent over the year-earlier period. Overall server sales are expected to grow 2 percent next year, largely on the strong sales of lower-end units, many of which run Linux.

Finally, 2004 will likely be the year in which the SCO trial concludes, which should be a signal event for the Linux community and investors. Most observers I spoke with didn't see the trial as having a serious dampening effect on Linux sales, especially with some vendors, such as Hewlett-Packard (HPQ: Research, Estimates), offering indemnification to their Linux customers.

"[The SCO issue] hasn't impacted our ability to close business," said Kevin Thompson, CFO of Red Hat. "There are a group of technology buyers on the fence right now, and the resolution of the SCO issue will help them make their decision."

However, the SCO lawsuits have cast a cloud over the Linux community at a time when it needs the spotlight. Investors will get a glimpse of how the case is going when SCO reveals the infringing code sometime in the next 30 days -- as mandated by a judge in the SCO/IBM trial.

One analyst I spoke with, who wants to remain anonymous, said that when the data are revealed, it could be the day "Linux gets a new lease on life."

Sign up to receive the Tech Biz column by e-mail.

Plus, see more tech commentary and get the latest tech news.  Top of page

Net neutrality rules are now repealed: What it means
More black women are running startups, but their funding still lags
Volvo is the latest automaker to bet on this 23-year-old's startup
Ikea was shut out of India for years. Now it's going big
Microsoft urges Trump administration to change its policy separating families at border
The world's biggest advertiser wants women to produce half of its ads

graphic graphic