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Friday, June 10, 2005

The Penguin :Slowing Down New Adoption

(Via Bweek)The number of North American outfits trying Linux for the first time is shrinking. One reason: The hidden cost of bringing in consultants New customer adoption used to be a key index of growth of the Linux operating system. SG Cowen & Co. notes in a new report that for the first time since it began tracking Linux in its annual survey, the number of companies planning to become first-time users of the software has fallen - by half. The report, finds only 7% of outfits with no Linux servers plan to add some over the next year.

That number represented a drop on the three previous Cowen surveys, dating back to September, 2003, which had found that from 12% to 17% of non-Linux-using companies planning to embrace the system. "In terms of penetrating organizations," says Cowen analyst Drew Brosseau "Linux seems to be hitting a limit." That doesn't mean overall Linux use is slowing. Linux won't find as many new customers as in the past in large part because it has already tapped the market that includes its most likely buyers: Unix users. Linux adoption has been strongest at companies that use the Unix operating system because creating programs for both systems is so similar. By now, though, most companies than run Unix also have some Linux systems. Some companies that experimented with Linux hoping for big cost savings found that the open-source software wasn't what they expected. "Some of the bloom is coming off," says Brosseau. "The cost of hiring linux consultants was killing me," says Stephen Shaffer, Independence's director of software systems. After eight months, he replaced the system with Windows and a batch of other Microsoft applications, which he believes will cut his costs by 70% a year.

But linux usage could be expanding at the companies that are already using the operating system. That's one reason why Linux sales continue to grow worldwide. Market researcher IDC found that revenue from Linux server sales grew double digits for the past 11th consecutive quarter. Plus, it expects customers to expand Linux use into a broader array of applications. Too early to take a view and that too based on a sample survey in North America alone– but the linux adoption movement is poised quite interestingly now

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