Linux

Linux gains an Asian foothold

China, Japan, and South Korea recently announced that they would work together to create a new, Linux-based operating system that would end their dependency on Microsoft. How will such initiatives affect U.S. companies?

In late August, China’s State Council (its governing body) issued a proclamation requiring all government ministries to buy only locally produced software during their next upgrade cycle. Given the limited number of locally produced software titles, the directive seemed more symbolic than substantive. That is, until the joint announcement from China, Japan, and Korea that they would work together to create a new operating system—based on Linux—that would eliminate their dependency on Microsoft. In this article, I’ll look at the Asian Linux initiatives and how they will affect U.S. companies over the next three to five years.

Supporting the domestic software market
Although the interest in using Linux and other non-Microsoft operating systems and applications in Asia appears to be gaining significant momentum, it’s certainly not a new phenomenon. Microsoft’s success in the Asian market has always been a sore spot for both governments and Microsoft.

Asian governments have seen their domestic software industry diminish as a result of the successes of Microsoft and other Western countries. For example, in the '90s, Microsoft Word went from having none of the word processing market share to almost 90 percent of the market. Chinese software company Kingsoft has seen the use of its word processing solution dwindle to almost nothing.

Without the government mandate in place, Kingsoft’s WPS Office product has been adopted by only one-third of the Chinese government. But public schools in Shanghai have been told to use WPS Office, and now all government PCs will replace their existing Office systems with WPS Office no later than the next upgrade cycle.

The government’s movement away from Microsoft is especially damaging because most of the money Microsoft receives from countries such as China (which have very little tolerance or enforcement of copyright laws) comes from the government or multinational companies. When you can walk down the streets of Shanghai and purchase pirated copies of Windows XP or Office XP for $5 U.S., there’s little incentive for consumers to spend money on licensed versions.

According to some estimates, piracy of Microsoft software in China may be as high as 87 percent. It will be interesting to see whether the Chinese government’s position on copyright protections changes if it's successful in reviving a company such as Kingsoft and making it the poster child for the Chinese software industry. If China allows its citizens to freely copy and share Chinese commercial software as they do software developed by U.S. companies, it’ll have no luck building a software community.

Of course, this is the basic flaw in the entire Linux ecosystem: Unless someone makes money on the “free” operating system, there’s no financial incentive for anyone to continue investing in it. Companies such as IBM, Oracle, and now even Sun are spending billions of dollars to make their hardware and software products work with Linux, and governments will find that simply declaring Linux as their preferred operating system will not end up saving them significant amounts of money. It will simply shift the problems from one bucket to another.

Linux momentum in Asia
According to the governments announcing this new Linux initiative, the reasons for their interest in Linux have as much to do with security as with protectionism. Even though Microsoft has signed agreements with the governments of China and Korea (and is in negotiations with Japan) to give them full access to Windows source code for analysis, the governments want to have more control.

By creating a new Linux shell and system services that allow for more effective Asian language software, they can have the best of both worlds: complete, unfettered access to the source code of a robust OS that they didn’t have to pay for and the ability to enhance it for the specific use of their national software industries.

Microsoft doesn’t release the source code for anything other than analysis because it doesn’t want to see the code splintered into multiple, incompatible versions that would affect a developer’s ability to release code that runs on the core OS. Countries that decide to tailor Linux for their software industries may ultimately find that they have created the same problem for their own software developers. But to software companies that have so little presence even in their own countries, the concept of selling software outside of their boundaries seems foreign anyway.

The concern over security will continue to be raised by both Asian and Western countries as a key reason to consider Linux over Microsoft technologies. And the affordability of Linux solutions over those based on Microsoft platforms will continue to drive interest in Linux not only in Asian markets but in any country where it requires weeks or months of the average citizen’s paycheck to purchase the software that runs on their computer. This includes not only countries such as India and Pakistan but also many countries in South America.

Why it matters
The Linux movement in Asia may seem meaningless to most American CIOs. What effect can the proliferation of Linux during the next five years—half a world away—mean to American businesses now? You’ll see two immediate effects.
  • First, I think Microsoft will begin another major campaign to shore up its security image. This may include making it more financially feasible for companies to move to more secure versions of its existing products (Windows XP, Windows 2003 Server, and Office 2003) rather than continuing to try to patch and protect earlier versions. It will also include a better methodology for applying security patches across all of its products—this should be available by the end of the year.
  • Second—more subtle, but potentially more profound—companies such as IBM, emboldened by the increasing international interest in Linux, will invest more heavily in the hardware and system software necessary to make Linux a success in the enterprise market. CIOs who have an interest in pursuing Linux initiatives (in spite of the SCO “dark cloud”) will find Linux hardware vendors more amenable to joint ventures, flexible financing terms, and generously priced consulting engagements in an effort to gain more market share and momentum in the rapidly growing Linux services segment.
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