Study: High growth for open source in Germany

By John Blau and James Niccolai

IDG News Service

Germany is poised to see sales of open source software and services grow substantially over the next few years, particularly in the public sector, according to a new report published Tuesday.

In its report “The Market for Open Source Software in Germany,” Soreon Research GmbH projects that sales of open source software and services will rise from 131 million euros (US$152 million) today to 307 euros million by 2007.

“When we talk about sales of open source software, what we mean, essentially, is a service that a vendor provides in copying the software on a CD and distributing the disc to a customer,” said Soreon company spokesman Christian Lipski.

SuSE Linux AG, for instance, offers enterprises a package that includes CDs and documentation, as well as the right to receive patches and updates and to use the company’s hotline for technical support, said company spokesman Christian Egle.

According to the study, the sale of open source software in Germany will account for only 10 million euros of the 131 million euros in sales projected for the year. The lion’s share comes from support services, which will generate 81 million euros in sales, followed by training at 27 million euros and installation services at 13 million euros.

The number of companies and organizations deploying open source software in Germany will increase from 12 per cent today to 18 per cent by 2005 and 24 per cent by 2007, the market research group said in a statement.

The study was based on interviews with 150 companies and organizations in the private and public sectors, excluding the agricultural market, using 10 PCs or more, said research director Steffen Binder. “Based on this, 12 per cent amounts to roughly 310,000 companies and organizations using open source products in Germany,” Binder said.

The growth will be fuelled in large part by the public sector, Soreon said. The market research group estimates that the public sector will account for 26 per cent of sales of open source software and services in 2007, up from 6 per cent today.

Indeed, numerous government bodies and other public administration groups have moved to open source software, ever since the federal government struck a deal with IBM Corp. to supply discounted computers with preinstalled Linux software.

The major reasons companies cited for using open software were cost, security and stability, Soreon said. Around 38 per cent of the polled companies and organizations said savings were the main reason for choosing open source software. Around 28 per cent cited security and stability as their main reasons.

Of the open source software products on the market, Linux and the services associated with are by far the largest revenue-generator. Soreon predicts that Linux software and services will generate 92 million euros in sales this year.

Nevertheless Microsoft Corp., the vendor perhaps most threatened by a move to open source products, said it continues to cut deals with government agencies in Europe.

The Latvian capital of Riga, for example, recently selected Microsoft desktop and server software for its e-Riga project to offer the city council’s services online. The project includes an e-mail service for the town’s 850,000 residents and an Internet portal for accessing the services, said Tom Brookes, a spokesman with Microsoft’s public relations company in Europe. The deal was won by a consortium made-up of Microsoft, Hewlett-Packard Co. and Ernst & Young LLP.

In Finland, meanwhile, the city of Turku recently signed a deal to deploy more than 3,000 Windows PCs for its roughly 20,000 students. And the city government’s real estate division is using Windows server software to run an online system where 174,000 city residents in public housing will be able to access management and maintenance services, Brookes said.

Financial terms of the deals were not disclosed. Microsoft officials claimed to have secured the contracts against bids from open source vendors.