SMB Linux Use on the Rise

Linux, according to AMI, of New York, is benefiting from a growing acceptance of open-source products overall.

"While Linux is becoming more mainstream, our research shows that SMBs are more interested in open-source solutions than Linux per se," said Abhijeet Rane, AMI's senior vice president. "The SMBs buying Linux solutions are mostly buying apps that operate in the background of a business."

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Rane singled out Web-enabled applications and e-mail as the most popular Linux software purchases for SMBs, and noted that solution providers play a crucial role in educating and implementing Linux-based solutions.

"Web-enabled apps is a hot area for us," said Salim Lakhani, CEO of Initsoft Web Solutions, a Cupertino, Calif., solution provider that designs and hosts Web sites and creates custom Web applications for companies of all sizes. "The great thing about Linux for us is that we never have to sell the benefits of Linux; SMBs know the value of the platform."

AMI's research shows that 24 percent of companies with 100 to 249 employees use Linux, while fewer than 5 percent of companies with employment under 10 own or plan to own desktop or server Linux products. The research was conducted in 2005, and AMI is currently updating it.

Professional business services have embraced Linux more than any other industry group: 16 percent of SMB professional firms use the open-source operating system. Most companies are attracted by Linux's reputation for low-cost, reliable solutions.

AMI's research also has found that Linux-owning SMBs spend three times more on IT than those without Linux. More than 20 percent of these SMBs expect to upgrade as much as 20 percent of their servers with new ones.

In addition, according to AMI, most Linux-owning SMBs have distinct brand biases when purchasing desktops and servers.

Most of the Linux action among SMBs is on the server side, said Rane. "The majority of server sales are replacements for old Windows boxes, but many are 'first-server' purchases," he said. AMI estimates that the 'first-server' opportunity is huge as only one-third of U.S. SMBs own server-based LANs.

"Linux is gaining a home among larger SMB entities that are able to handle the complexity of Linux and to invest in retaining internal IT staff," said Rane.

Recent data from Gartner Dataquest Research reveals that Linux server sales are exploding. The worldwide market for new Linux servers is expected to increase from $6.9 billion in 2005 to $12.3 billion in 2011, said Jeffrey Hewitt, a research director at the firm.

Linux is also penetrating into the desktop. IDC has reported that desktop Linux will make large gains over the next couple of years, hitting $10 billion in annual revenues by 2008.