Despite strong backing of application vendors, Linux adoption has been a tad slow in the past. But the scene seems to be changing with several government bodies and corporations embracing the open source platform. N Geetha and Syeda Beenish assess the channel-opportunity

The market is witnessing a sufficient growth momentum in terms of volume sale of Linux licenses in server and desktop space, as many players are emerging, particularly in the distribution game. There is also a price war that is prevalent in this market amongst the channel players, which was not the case earlier. This reflects the fact that the open source is being taken seriously.

Several innovations in products per se coupled with vendor-strategies and partner-enthusiasm to drive support services on the open source has fuelled the growth. A Gartner report says that the year 2012 will mark a time when 80 per cent of all commercial software will include open source elements and those who don't adopt it will face acute cost disadvantage. While many players who have ventured into the Indian market have not seen major success in the past, the more focused players are reaping the benefits.

Linux is not confined to servers (though it is predominantly server-focused). It is spreading to desktops as well opening up opportunities for players and customers. Raj Mathur, Proprietor, Kandalaya, Linux consulting firm observes that Linux and free and open source software (Foss) are making inroads in verticals like government, IT, corporate, education, research and NGOs. He says that Foss is popularly used for network security (e.g. firewall, proxy). Going forward it will used in various applications, which are currently running on legacy systems. Mathur is also the founder member of India Linux Users' Group. Kandalaya has about 100 Lniux customers.

Ashish Raina, Principal Analyst, Gartner, finds greater adoption by service providers and offshore service companies. He says, "While only four per cent of enterprises are using open source, in an year's time, it is expected to go up to 11 per cent. Key driver will be profit margin pressures, depreciation of rupee, negligible open-source licensing cost and greater value addition to showcase technology innovations and capabilities."

Manish Malhotra, Director, Sun Microsystems, sees proliferation of the open source technology across platforms, viz. workstations, desktops, servers, storage, or communication protocols like Java. Sandeep Menon, Country Manager, Novell India points out that the Linux is growing at 28 per cent in India.

Nandu Pradhan, President & MD, Red Hat India finds education, government, telecom and BFSI adopting open source for speed of technological advancement, cost effectiveness, no lock-in and support. Pradhan adds, "Open source has lowered capex and opex of customers to the tune of 40 per cent."

Providing an alternative platform

Channel case study: Manufacturing Automation & Software solutions, Kolkata S Aman Gopal S Aman Gopal, Director, Manufacturing Automation and Software Solutions (Mass), a solution provider from Kolkata is certain that Linux is now the chosen alternate platform for customers across industry verticals. Being a solutions partner for Novell (Suse Linux), Mass sees a great scope for Linux in the country as there are applications on Linux for every business requirement that come with good support. “Adopting a consultancy and support model is lucrative proposition to push Linux and other open source solutions. Expertise on these solutions ensures that we make good money on Linux support,” informs Gopal. He observes that the sectors like scientific research, manufacturing, government, POS systems, financial services, and data centers across industries have been major adopters of Linux, both for servers as well as clients. Mass has close to 100 customers. Some of its top customers are Tata Cummins, ICICI, and Usha Martin. “As part of our offerings, we support our Linux customers on end point security, network security, and IP platforms wherein the migration to Linux is carried out,” maintains Gopal. While observing that evolutions in this technology are faster, Gopal finds Linux business to be profitable. “For every dollar that Novell gets on its products, we as a partner can fetch $2 dollars from services besides the product margins,” he says. “In most cases, we sell solutions worth $100 and earn $300 through services. So even if we have such 10 customers in a month, there is huge service revenue.” According to Gopal, the various services that partners should be able to address are migration from different platforms of customers’ choice, upgrading systems when Linux is deployed without disrupting the existing data, upgrading the browser-based applications to Linux, upgrading ERP, CRM and several other enterprise applications, and also bringing in the interoperability with Windows or any other platforms. Out of Mass’s total Linux revenue of Rs 4.5 crore last year 20 per cent was the contribution of services. From an investment point of view, Mass spends Rs 75,000 per annum on developing skills of its team. The partner has 20 engineers dedicated for open source deployments and support. Recently Mass carried out an implementation at Usha Martin Group wherein the customer migrated 1,000 desktops to Linux from Windows. The project also had a component of network integration to Linux. The total implementation took four months and fetched Rs 2 crore in revenues to Mass. One of the advantages that Gopal and his team find driving Linux is that Linux desktops are usually not plagued by viruses. The management of desktops therefore becomes far easier as the administrators do not require to ensure that virus killers are properly updated and subscribed for (usually a yearly subscription, though these days there are 3-5 year consolidated packages attractively priced from some good companies). “The Suse migration implies a significant cost benefit too, especially for organizations having more than 50 desktops. Besides, Linux being a stable OS (provided the hardware and network components are properly configured and installed), the number of hard-disk crashes or requests for OS reinstallation are less as compared to a Windows environment,” informs Gopal. The way forward for Mass is to expand its customer base and increase the depth of offerings on Linux and tap more industry segments.

It is said that Linux market in India stands at 23 per cent of the server market. The distributors, solutions providers, and systems integrators opine that the Linux adoption in India has been about 35 per cent.

Hyderabad-based S Pulla Reddy, MD, SP Software estimates that Linux has been growing at 30 per cent rate during the past two years. Large partners like Delhi-based Prateek Garg, MD & CEO, Progressive Infotech guesses that India's market for Open Source software stands at Rs 200 crore and is growing at 50 per cent annually.

Sudarshan Ranganathan, CEO, Veeras Infotek, a solution provider from Chennai informs that government bodies and not-for-profit organizations have aggressively adopted Linux. Veeras is currently building a social networking portal using Linux to help corporate HR departments to bring fun, connectivity and collaboration amongst employees. "Once this solution is launched we should be able to drive Linux more aggressively,”" says Sudarshan.

S Aman Gopal, Director, Manufacturing Automation & Software Services (Mass), a partner from Kolkata finds sectors like scientific research, manufacturing, data centers, government, and BFSI as the major adopters Linux. Mass has about 100 customers across these verticals. Some of its top customers are Tata Cummins, ICICI, Usha Martin, etc. Gopal invests close to Rs 75,000 annually towards building skills.

Faisal M Paul, Country Manager, High Performance Computing and Linux business, HP India feels that affordability is the primary reason for growth of Linux . "People who want to cut costs or are on tight budgets opt for open-source. Companies that are research-centric also deploy Linux due to the interoperability it provides."

Vendor-moves

Nandu Pradhan

Seeing retail, finance, banking, and insurance as the major deployers, Sun helps them to evaluate the quality of their source codes and assures support. According to Malhotra, the challenge has been to monetize the growing volumes on the MySQL which has witnessed 12 million downloads (50,000 every year).

Novell too has seen a shift towards Linux in banking and government sectors. Sandeep Menon claims that Novell has 65 per cent market share and has an installed-base of 20,000 Linux servers. Recently it helped sell 40,000 desktops with Suse Linux to students.

Menon and his team are working on bringing interoperability with Microsoft for the data center environment where virtualization solutions are deployed. Novell also carried out 10 deployments of SAP on Suse platform recently.

"Suse supports SAP, Exchange, Lotus Notes, and varied applications that the customers are using today," Menon informs.

Working with two distributors including Redington and Sonata, Novell has 25 partners to drive Suse range who contribute about 75 per cent of total Suse Linux revenues to Novell.

Hewlett-Packard uses open-source for middleware and applications. HP's Paul informs that the vendor focuses on verticals like healthcare, government, telecom, and BFSI. The share of open source in the enterprises, according to him, is growing at 20-25 per cent annually.

Paul claims that HP Open Source Middleware Stack (OSMS) is designed to help reduce Linux roll-out complexity and risk, accelerate deployment, and expedite integration with heterogeneous, multi-OS environments.

He points out that a lot of critical applications like CRM, ERP, in healthcare records, Asterik's PBX, etc are open source. "With HP infrastructure and the open source capabilities, solution providers can bundle middleware and open-source applications and make their offerings competitive," says Paul.

For Red Hat, the priority is to increase awareness about open source and Linux by building an ecosystem of ISVs and deployment and support partners. Redhat's Pradhan states that his company emphasizes on making partners competent and offers them lead generation and marketing collateral support. He informs that RHEL 5 ships with high end features like virtualization, clustering, global file system, security etc. built in as a standard offering.

"We work closely with OEMs, system integrators, ISVs, learning services partners, and professional services partners. We lay a lot of emphasis on partner-training," claims Pradhan.

Key adopters

Red Hat's Pradhan sees e-governance as the key opportunity for open source. Some of the projects like e-courts by the Judiciary, Sarva Shiksha Abhyaan, and government departments like Andhra Pradesh Tourism Development Corporation, Indian Post, Calcutta Electric Supply Corporation, and several other government bodies and projects have embraced Linux and open source.

Amongst corporates, some leading adopters are Axis Bank, Airtel, Cleartrip.com, HDFC Bank, Indian Express Newspapers, LIC, naukri.com, and several schools in Kerala.

According to Anil Bakht, Chairman and Managing Director of Eastern Software Systems (ESS), the single biggest reason behind growth of Linux is price. Enterprises have started using open source software even for mission critical applications owing to this.

"No one would want to spend precious dollars out of their already stringent IT budgets when they get similar reliability and performance at far lower costs,” says Bakht. Progressive's Garg opines, "In case of Linux, innovations are built around high performance and thin client-based solutions."

Challenges for partners

Chennai-based Dynamic Computers MD Hiren Shah and Veeras Infotek CEO Sudarshan opine that the partner-services model is not well-evolved for open source software products yet. Sudarshan observes that several small businesses have deployed mailing solutions on Linux but they are not using it for business critical applications.

"There are too many flavours floating around like Suse, Ubuntu being amongst the prominent ones. Unless there is standardization and ease of use and support available in plenty, the growth is still at the initial curve," says Sudarshan.

Besides this, availability of skilled manpower leading to higher maintenance costs, transfer of source code leading to possible loss of IP, a small user-base restricting the investments in Linux are some other challenges for further spread of Linux.

According to a Linux veteran U Taranath, CEO, GT Enterprises (GTE) a Bangalore-based distributor of Novell and Red Hat, with entry of multiple players in the market, there is a new challenge for channels supporting Linux, and that is price war.

Positive signs

But despite these challenges several partners have gone ahead with their solutions and are making Linux a reality. As Dynamic's Shah who drives Red Hat maintains, "There are decent returns if you focus on services and not just sales."

U Taranath of GTE has seen 40 per cent growth for his Linux solutions and services business this year. Linux contributed 35 per cent to GTE's Rs 25 crore revenue last year. The company has close to 200 customers that have deployed Linux. The sectors that GTE addresses are defence, banking, and software companies. Taranath finds scope for server-based customized applications and services on top of Linux operating system.

Shah of Dynamics targets BFSI and ITES. He has about 12 customers and he makes 15 per cent margin on services. He says migrating to varied messaging applications, databases, and mail servers fetches good money. For Shah, Linux sales contribute close to 15 per cent to Dynamics's revenues.

SP Software's Pulla Reddy sees a good demand for Linux solutions from sectors like pharmaceuticals, education, IT, and gaming.

Most partners do bet on this opportunity and are bullish about its future, so also the vendors.

Way to the fore

ESS's Bakht says that since India is a price-sensitive market, open source software is bound to find greater acceptance. "Linux on desktop is poised to do well over the next three-four years," he predicts.

However, to truly reap the benefits that Linux promises, partners need to build expertise. They must invest in training their workforce on the Linux distributions (flavors). If they are able to offer implementation and support to the customers, future looks bright, both for them and open source software.

- With inputs from Pujya Trivedi