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TECH TALK: Linux World: Linux in the Enterprise (Part 2)

February 7th, 2002 · No Comments

In the small and medium enterprises (SMEs) in developed markets, Microsoft’s products are very strong both on the server and the desktop. Linux’s potential is limited here to the server side, just like in the larger companies. SMEs do have a significant financial incentive to use open source technologies, but the limiting factor is the perceived lack of support and the dearth of developer expertise: there are hordes of Microsoft developers who can custom-develop applications on the Windows platform.

The situation is quite different in emerging markets. While the large companies are very much similar in both markets, the number of large companies in emerging markets capable of “dollar-denominated” spending is much less. In India, there are perhaps 100 companies who can spend what their counterparts internationally would do on technology. The problem for most companies is that technology is priced in dollars while, for most of them, revenues are in rupees.

The big opportunity for Linux is in emerging markets for the SMEs. These companies have limited spending power but still need technology to keep them competitive and part of the supply chains of the bigger companies. Linux can play a strong role both on the desktop and on the server. What SMEs may lack in their individual spending power is more than made up by their numbers; it is estimated that emerging markets may have 10-15 million SMEs.

This is the mass market that Linux needs to target just like Microsoft targeted the mass market of SMEs in the developed countries. Many of the SMEs in emerging markets are just beginning to realize the importance of computers and communications.

This is a market which is “under the radar” of many of the bigger computer vendors and very hard to reach.

What SMEs need is technology, and especially software, as a utility – as subscription, or on a pay-as-you-go basis. They undoubtedly need the latest technologies, and yet cannot afford to pay the large upfront costs for purchase and implementation. They need out-of-the-box solutions, which are usable with minimum fuss. For SMEs, software is not necessarily a differentiator, but a necessity which can help them “stay in the loop” with their bigger customers and assist them in their growth. Yet, their ability to spend large amounts initially is very limited. This is where Linux can become the foundation for architecting solutions built on open source.

While the server market is the obvious starting place, the desktop segment should not be ignored. By using thin clients and a collection of the basic applications needed on the desktop, it is possible for Linux to make inroads – many of the first-time users can quit easily adopt Linux as compared to Windows. It is only when the “Windows habit” sets in that migration becomes difficult!

Here then is an opportunity to build a software brand – one targeted at the emerging enterprises in emerging markets. It needs to use the newer, emerging technologies like web services, wireless LANs and grid computing to make Linux as the fabric of these enterprises. The model here is not of software as a product but as a service. These are the markets which have so far been ignored. These are the markets which hold out the greatest of opportunities in the coming years for Linux in the Enterprise.

Tags: Tech Talk

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