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Survey: There's No Business Like Linux Business

Technology solution providers are making good money on Linux -- and the more Linux business they do, the more profitable they are, according to a survey by the Institute for Partner Education & Development (IPED).

Channel partners are making good money on Linux, and the more Linux business they do, the more profitable they are, according to a sponsored survey of 400 qualified respondents conducted by the Institute for Partner Education & Development (IPED).

Linux accounts for roughly 7 percent of total revenue for all survey respondents, and more than 20 percent of revenue for about one-third of the solution providers that boast a stronger Linux presence. Of the latter group, roughly 50 percent believe that Linux is more profitable than their other businesses, while 14 percent believe the open-source platform is less profitable, according to the study.

linux market shareThe results are no surprise to David Gynn, an application infrastructure expert at Optaros, an open-source consulting firm in Cambridge, Mass.

"The use of open source is a key factor in our profitability," he said. "I think we will continue to see Linux as the preferred environment to deploy open-source-based applications."

The IPED study showed a strong correlation between Linux business as a percentage of total partner revenue and partner profitability.

"There is a perfect correlation between the percentage of Linux-based solutions sold and the relative profitability of those solutions," said Rick Vieth, senior practice manager at IPED, a division of CMP Technology, the Manhasset, N.Y.-based publisher of CRN. "The more experience they have with Linux and the greater percentage of Linux in their business, the more profitable they are."

The pool of survey respondents included a wide variety of solution providers that generated more than $1 million in sales annually, and that represented some or all of their solutions are Linux-based. More than half of the respondents were C-level or senior-level directors.

Separate research from IDC echoes the IPED findings. According to one of the research firm's recent surveys on open-source adoption in the channel, one-third of all VARs, systems integrators, and consultants are generating at least some revenue from Linux.

Roughly 10 percent of all partners have made a significant commitment to Linux and are generating at least 25 percent of their revenue from Linux-based solutions, said Matthew Lawton, an analyst at IDC.

ISVs are storming in to capitalize on the expanding interest in open-source and Linux solutions in the midmarket. At LinuxWorld Expo this week in San Francisco, several ISVs including Centeris, GroundWork Open Source, Levanta, SpikeSource and XenSource are formally launching new channel programs or extending existing efforts.

XenSource, developer of the Xen virtualization engine, recently launched a Web site for a multitiered channel program the company is finalizing as it prepares to ship its first virtualization product, called XenEnterprise.

One key executive said the company's XenEnterprise product was developed with the channel in mind because XenSource has decided not to provide direct support to customers, an anomaly in a market in which open-source vendors often make their money primarily from services and support. Instead, XenSource said it will rely on the channel 100 percent for sales and service.

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