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Supplanting the Evidence

I've seen numbers from various sources and heard the argument that open source software is overtaking commercial software. Okay, where's the evidence? I get the fact that a lot of companies and individuals are trying open source alternatives to open source software, but I wouldn't characterize open source as "overtaking" commercial software.

David Wheeler wrote a great article that was intended to encourage companies to examine open source as an alternative to commercial software. The article presented quantitative evidence, across various dimensions, to prove that open source software was gaining broad acceptance. In one section, he discussed web sites. For example, Wheeler provides numerical statistics regarding web server use. According to his research, Apache was more prevalent than IIS, including growth over the last year. His one admitted flaw is that Netcraft (the provider of the statistics) was looking at the web site, not the web server. If you look at the operating system of the server running the site, the numbers reverse—Microsoft Windows is the dominant OS, with IIS the dominant web server. In doing some of my own quick searches, I found that Netcraft didn't exactly report accurate results. For example, when searching on Ford.com, Netcraft reported that their web servers were running Linux as the server OS and IIS 5/6. Mmmmm... I don't think Microsoft supports Linux as a server operating system for IIS. Looking more closely, Netcraft was actually picking up Akami's caching servers, but it still leads me to believe that overall the numbers might not be terribly accurate.

If looking at web servers doesn't work, let's look at commercial software revenues. My working theory is that if broad support for open source software were truly growing, we would expect to see significantly slower growth among commercial software companies. Since Microsoft seems to take the brunt of the venom from the open source community (and Linux is one of the most popular open source packages), let's examine Microsoft financial performance over the last four years. As of last year, Microsoft has total sales revenue of $36.8 billion. For the last four years, they've been growing at an average rate of 12.56% (well beyond even the general technology industry level). If you compare their 2000 fiscal year revenue to their 2004 fiscal year revenue, they grew 60%. [3] Why is this important? Even with the growth of open source software and adoption of free software in some percentage of the enterprise, Microsoft is still growing at staggering rates. More specifically, one of the biggest areas of growth for open source software is Linux and Apache—two very key areas of revenue for Microsoft. This is compounded by the entrance of open source productivity tools such as OpenOffice.org, which competes with one of Microsoft's largest revenue generators, Microsoft Office.

What about other companies? Let's take Oracle as another example. Last year, Oracle grew at a 7% rate. What's interesting about Oracle is that they've publicly supported Linux and haven't grown nearly as fast as Microsoft (obviously not a supporter). Another example is Symantec, another pure commercial vendor, which grew 33% for the same year. While you can certainly find examples where commercial software companies grew at a slower rate or were less profitable, this really isn't a surprise given the state of the economy over the last four years. However, that's a long way from saying that they've been radically affected by the open source movement. In fact, it seems that the primary target for the movement is Microsoft, and Linux is the challenger. If this is true, Microsoft seems to be faring well.

Some readers may contend that I've taken a narrow view of the market, asking targeted questions where it's hard for open source to look good. I accept that challenge. Wheeler's article compares OS penetration by looking at a primarily European study that included educational institutions and found that Linux outpaced Windows. Even in 2001 (when the study was done), this wouldn't be a surprise when you narrow focus to a market that's more prone to using "free" software in countries that don't particularly care for Microsoft. I'm a capitalist and interested in profit, so I chose to look at earnings for large software companies to see whether the open source development model had become so prevalent that commercial companies were suffering; it doesn't seem that they are.

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