CCID Consulting: China's Linux Market up by 30.9% in 2007Q1

May 08, 2007, 01:00 ET from CCID Consulting Co., Ltd

    BEIJING, May 8 /Xinhua-PRNewswire/ -- Data in CCID Consulting's
 Analysis Report on China's Linux Software Market in 2007Q1 show that
 operating sales revenues in China in 2007Q1 reached 1.234 billion Yuan, up
 by 9.4% over 2006Q1. CCID Consulting is China's leading research,
 consulting and IT outsourcing service provider, and the first Chinese
 consulting firm listed in Hong Kong. Linux continued to top the growth of
 all operating system products. Its sales revenues reached 31 million Yuan,
 up by 30.9% year-on-year, continuing to maintain a fast growth momentum.
 Linux accounted for 2.5% of the overall non- embedded operating system
 market, up by 0.4% over 2006. However, it was still in a weak position as
 compared with Windows, Unix and other competing products.
     I. Affected by Vista, Linux growth slowed down.
     As China's GDP grew by 11.1% in Q1, the Linux market also maintained a
 relatively fast growth momentum. On one hand, this was closely related to
 the overall situation of national economic operations. On the other hand,
 it also benefited from the continuous pull of strategies towards the rise
 of Central China and the revitalization of Northeast China. A steady
 increase in IT application demand drove up the growth of the software
     Thanks to the radiative effects of such large-scale activities as the
 upcoming 2008 Beijing Olympics Games and the World Expo 2010 Shanghai
 China, IT applications in some industries are gathering pace. To a certain
 extent, this has pushed forward the growth of the overall software market.
 In addition, State policy support for the Linux industry is also one of the
 driving forces for continuous market growth. However, since Microsoft
 introduced its Windows Vista operating system at the end of 2006,
 particularly after it signed a series of pre-installation agreement with
 leading PC makers, Linux growth slowed down in 2007Q1. The increased demand
 was basically concentrated on server-end Linux.
     CCID Consulting's analysis of the vertical markets shows that
 government departments and big enterprises are still the main Linux users,
 accounting for a market share of 67.2%. The "copyright software" policy
 jointly implemented by the four major ministries and commissions has also
 benefited Linux. Cooperation between vendors in the industry has directly
 pushed forward further market growth.
     As for industry segments, Linux market growth was mainly concentrated
 in the government, financial services and telecom sectors, which accounted
 for a market share of 34%, 22.5% and 21.2% respectively. The implementation
 of some government procurements, telecom and netbar projects and the
 upgrading of banking services systems were the important driving forces for
 the growth of Linux applications. In addition, the education sector
 achieved a market share of 10.4%, basically level with that of last year.
     II. Linux faced more grave external challenges.
     In the report, CCID Consulting pointed out that data released by
 Microsoft at the end of March showed that 20 million sets of Vista Personal
 Edition were sold worldwide in the first month of its introduction to the
 market. Of this, the sales volume of Vista Personal Edition in China was
 twice the initial sales volume of XP. All kinds of fast upgrading
 strategies and the $3 copyright Windows XP provided to government
 administrative departments in developing countries were yet another "war"
 bugle call from Microsoft to Linux. Meanwhile, Oracle staged offensives to
 Red Hat in the Linux services market. The dispute which Novell induced in
 the open source software industry further intensified competitive pressures
 in the Linux industry, adding too many uncertainty factors to the
 originally relatively weak Linux industry.
     III. Vendors played their respective skills and competed on various
     As for industry standards, to strengthen the competitiveness of the
 Linux industry, the Open Source Development Laboratory (OSDL) and the Free
 Standard Group (FSG) were merged into the Linux Foundation. It will soon
 introduce new test tools and thus strengthen Linux standards. This will
 greatly improve Linux's ease-of-use and low cost advantages.
     In the market, vendors came up with their tactics in the face of
 competition inside and outside the industry. In January, Red Flag Linux
 signed a joint operating system development agreement with MiracleLinux and
 Haansoft. The new edition of Asianux will be released this July. Novell
 released SUSE Linux Enterprise 10 at the BrainShare Conference. TurboLinux
 further strengthened its cooperation with Intel in virtualization
 technology. This made TurboLinux China's first Linux distributor to support
 VT in China. The continuous introduction of new products and new
 technologies is the very direct embodiment of vendors to meet external
 challenges and serve consumer demands.
     Meanwhile, Linux vendors are stepping up their efforts to expand in the
 government procurement and SMB markets. In 2007Q1, Novell won the bid for
 central and State organs' Project of Centralized Procurement and Supply of
 Information Products. Red Flag Linux obtained the qualifications for "100
 Piloting Innovative Enterprises". To a great extent, these have promoted
 the development of Linux in China. In addition, with the gradual reduction
 of government procurements and orders from big enterprises, strengthening
 abilities of sales towards small- and medium-sized customers and expanding
 marketing channels have also become the new areas of competition for Linux
     To sum up, CCID Consulting's research shows that China's Linux market
 is still small in size at present. In the face of great competitive
 pressures, continuously improving their R&D strength, expanding marketing
 channels, forging cooperation both inside and outside the industry and
 carrying out M&As will become important strategies for vendors to compete
 for the market. Meanwhile, CCID Consulting forecasts that in the remaining
 3 quarters of 2007, there will be unprecedented competition in China's
 Linux market.
     About CCID Consulting
     CCID Consulting Co., Ltd. (also known as CCID Consulting), the first
 Chinese consulting firm listed in the Growth Enterprise Market of the Stock
 Exchange (GEM) of Hong Kong (stock code: HK08235), is a direct affiliate of
 the China Center for Information Industry Development (hereinafter known as
 CCID Group). Headquartered in Beijing, CCID Consulting has so far set up
 branch offices in Shanghai, Guangzhou, Shenzhen and Harbin, with over 300
 professional consultants and industry experts. The Company's business scope
 has covered over 200 large- and medium-sized cities in China. Apart from
 home market development, CCID Consulting is establishing international
 cooperation links across the United States, the Asia-Pacific region and
 Europe, by setting up agents in the U.S., Japan, South Korea, Australia,
 Singapore, Italy and Russia, with the aim of going global.
     Based on four major competitive areas of powerful data channels,
 industrial resources, intense knowledge and deep understanding of
 information technology, CCID Consulting provides customers with consulting,
 research and IT outsourcing services covering strategy planning, IT
 application, marketing strategy, human resources and information technology
 outsourcing. Our customers range from industrial users in IT,
 telecommunications, energy, finance, automobile, to government departments
 at all levels and diversified industrial parks.
     CCID Consulting is committed to becoming the No. 1 brand for strategy
 consulting, the No. 1 consultant for enterprise management and the No. 1
 expert in market research. For more information, please visit our website
     For more information, please contact:
      Cynthia Liu
      Coordinating Manager
      CCID Consulting Co., Ltd
      Tel:   +86-10-88559080

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